Ten years after bitcoin started, I still hear many educated people saying "bitcoin is a Ponzi scheme" or "it has no value" (or both).
Some months ago, I wrote an article called "What's Bitcoin's Value?" discussing several more-or-less plausible "reasons for-", or "sources of-" bitcoin's value. I called the first and most important one "ideological value"
[...] people want to make a statement, to send a message, to protest against a system - the current financial system - seen as deeply flawed, unfair and exploitative. In a sense, it has been said that bitcoin embodies yet another aspect of the "revolt against the global (financial) elites"
After 2008 and even more so after 2016, nobody will contest a pervasive feeling of decline in our civilization. The level of mistrust has greatly increased. We have lost trust in politicians, in media, in each other. Our societies seem to be tearing themselves apart, to have entered a destructive spiral of hysteria and radicalization.
The responses to decline in firms, organizations and states have been famously analyzed and explored in a landmark publication from the 70'-ies by Albert Hirschman, called "Exit, Voice and Loyalty".
If the underlying blockchain technology is a "trust machine", its first and most famous application, bitcoin, uses it to offer an "exit from the global financial system"
Someone who finds himself part of a declining firm, organization, or state can choose to "stay loyal":
"I think things are not going well at all but I trust the leadership: they have noticed it too, they have the right analysis and they will come up with solutions to our problems" credit: GETTY Images
Those who trust the capacity of the system to right itself, to heal, even if they might not trust the existing leadership can choose the Voice option: expressing their unease, proposing an analysis, proposing solutions, protesting against the analysis put forward by the existing leadership or against the solutions, agitating for a change of leadership. credit: "New Mail Nigeria"
However once loyalty to the leaders is lost and confidence in the "system" as a whole fades, the only reasonable answer is an "exit":
It used to be that if one wanted to live a decent (perhaps even prosperous) life, there were a few choices. Then the field narrowed drastically: with "capitalism" victorious, the "market economy" took hold in all prosperous countries, its "flavors" ever closer, its uniformity ever greater.
In practice, this was brought about by increased freedom in capital movement, free convertibility of currencies, closely aligned financial and monetary institutions, with independent central banks all aiming for a 2% inflation rate, all ending up resorting to "quantitative easing" (aka "money printing") when the economy stalled.
With the "rules of the game" the same everywhere, whether in Europe, US or Asia, the recipe for financial success began looking more and more similar all over the world.
The competition field for individual success gradually became global. Those who didn't want to join the "rat race", those not lucky enough or not good enough to succeed in one place found themselves with nowhere to go, with "no other game to play".
The global financial system offered no exit option.
Until the invention of bitcoin, that is...
As such, bitcoin provides a useful "safety valve" for a part of the discontent. The "defensive" narrative of "Bitcoin as the 'knight in shining armor', defending the victims of the 'banksters' from their oppressors" is quite strong and people believing in it justify a significant part of BTC's worth.
These words from my "What's Bitcoin's Value?" article are cast here into a classical, well-known analysis framework, that of Albert Hirschman's 1970's "Exit, Voice and Loyalty".
In a context where, although changing jobs, parties or countries is still possible, people started feeling oppressed by "the dictatorship of the financial system", the dictatorship of money. Indeed, the globalisation of the financial system left no "exit" option, right when it, witness the 2008 financial crisis, entered decline.
However, bitcoin alone cannot compete with the fiat currencies system. As The Economist observed back in June 2011:
Bitcoin is technically sophisticated. As a monetary system, it looks primitive.
source:Bits and bob
Back in March 2018, in another post titled Blockchain Revolution: Money and Credit, I was writing
Bitcoin and cryptocurrencies challenge the monopoly of fiat money thus enabling a new, complementary economy.
As I plan to discuss in a future paper, in order to mount a significant challenge to the dictatorship of the fiat money, bitcoin needs the help of the other blockchain systems with their cryptoeconomies and currencies. Bitcoin needs the "cryptoverse"
Interesting analysis. George Gilder calls it the "cryptocosm" in his book "Life After Google".
Well written perspectives as I think these times we are headed towards will make these factors even more relevant. I see more as an evolution instead of a revolution!
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bitcoin will survive every hurdle
How much you earn on a single post man ?😱😱😱
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Amazing write-up. The world has not been able to comprehend the idea behind bitcoin. Bitcoin is the solution to all financial problem across the world.
Nice article! I am investing in Bitcoin for long term. May be for 30 or 40 years. I am not sure how much it will be in future. But I am not selling and will hold Bitcoin along with other coins for long term. We take risk with all sort of investment including business so why not Bitcoin or Crypto. I think in next 20 years block chain and crypto currency will rule the world.
The funny thing about bitcoin being called a ponzi, to me, is that there used to be (not sure if there still are) many many different ways to get free bitcoin. lol. There were faucets and ad campaigns and such that you could take advantage of and get "free" (Doing a task isn't technically free... lol) bitcoin in the process.
What ponzi have you ever heard of, that gave you free entry? And then allow you to keep getting money free? With no investment? :P I haven't heard of any, at least.
Also, bitcoin made no promises to anyone! Bitcoin itself never said "I'll make you tons of money! Just buy X amount of me!" Our beloved Bitcoin has never asked anything of any of us. Except for us to love it. lol
Good analysis, some people still see bitcoin as a ponzi scheme but they didn't know what is behind that!
Great insight. Bitcoin is a pure escape from the deterioration of a centralized and greed infected society. It will not be just an exit but a mass exodus. Cheers
"Ponzi scheme" People never change, they just didn't know how powerful is blockchain technology! The time will come for sure!
The bitcoins is a future!
Wow, very nice analysis and very good conclusion!!
all i read was "exit to voice" lol
i heard ned ius telling steem devs to leave to eos
maybe ned will make a steem airdropped voice alternative with his money hes makin sellin steem LOL
its fine we are better without ned, but we can beat ned ewto it, aggroed can put Steemp from steem engine onto eos, and we can have a steem sbale coin on eos that stays 1:1 to steem price, that way we can be connected to eos, and have a steem token on newdex. steem engine too can be an eosio token traded listed for free on newdex
inter blockchain communication
Obviously, BTC is not a scheme and it does have value. But does it have a future? It is based on outdated technology and its volatility won't let it grow outside the crypto enthusiasts community. Besides, the total lack of regulation may not be a pro for the currency in the long run.
Thank you for posting this. I need more people like you in my life.
I totally agree with your view except it's not just the "dictatorship of fiat money", it's something bigger: the dictatorship of the social stack.
I'm curious to know what you think about what I'm writing. https://staging.busy.org/@damonvoks/the-social-stack https://staging.busy.org/@damonvoks/social-stack-part-2
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One big factor on bitcoin's side is time, as fiat currency is continued to be printed it becomes more diluted.
It's only a matter of time before inflation takes permanent hold. Look at negative bond rates in Europe if you want evidence.
Bitcoin will become digital gold as more people realise that it is a hedge/protection against inflation and the current fiat-based monetary structures.
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Bitcoin needs the "cryptoverse"
Well said! !ENGAGE 100 und lieben Gruß Kadna
There has already been too much
To view or trade
ENGAGE go to steem-engine.com.