I'm saddened with how many technologists here think of money.
As if our current system of fiat currency is in any way reliable, let alone at the ultimate stage of its evolution as a technology of wealth transfer.
If I look at the US currency as a technology that enables trade and cooperation, I notice:
- falsifiable; see the North Korean super dollar;
- pieces of metal alloy; coins are a souvenir from the past we shouldn't be bringing them into the future.
This makes me doubt if I can trust it and unlikely that I'll carry it on me.
On the other hand Bitcoin and other cryptos are currencies from the future that we all can buy and use today.
These are currencies designed to assure trust between unknown parties, so they are most definitely a means of exchange with no significant counter-party risk.
As a store of value, they suffer from the same speculative price fluctuations all too common in the FX markets, as we can see with the GBP over the last year or so. In crypto, this natural movements are amplified because there are no jurisdictions and very low barriers of entry, so when the coin supply doesn't increase to meet the demand prices go up, as they should. And lets not forget that several countries have already moved to recognise crypto-currencies as legal tender, so demand is increasing by reaching wider portions of consumer market.
As for crashes, to the best of my recollection, all major ones were caused by panic selling following news of major hacks (https://storeofvalue.github.io/posts/cryptocurrency-hacks-so...) or rumours of impending legislative crackdown in China and now in the US.
The intrinsic value of crypto-currencies is in the platforms that support them, so not only the market cap but also what the project stands for and what it can deliver in terms of market proposition, for instance:
- Ether is used to pay for resource utilisation on the Ethereum platform which I use to develop smart contracts, but the Foundation is re-inventing the internet so that's how I value the currency.
- Monero, ZCash are in the forefront of cryptographic research and are some of the most accessible and privacy protecting financial instruments available so that's how I value them.
- Bitcoin is all about economic resilience and self-sovereignty, unfortunately the in-fighting is bound to decrease its usefulness.
If I look at the US currency as a technology that enables trade and cooperation, I notice:
- falsifiable; see the North Korean super dollar;
- pieces of metal alloy; coins are a souvenir from the past we shouldn't be bringing them into the future.
- porous fibre carry bacteria; See here: http://www.newsmax.com/health/Health-News/paper-money-germs-...
This makes me doubt if I can trust it and unlikely that I'll carry it on me.
On the other hand Bitcoin and other cryptos are currencies from the future that we all can buy and use today.
These are currencies designed to assure trust between unknown parties, so they are most definitely a means of exchange with no significant counter-party risk.
As a store of value, they suffer from the same speculative price fluctuations all too common in the FX markets, as we can see with the GBP over the last year or so. In crypto, this natural movements are amplified because there are no jurisdictions and very low barriers of entry, so when the coin supply doesn't increase to meet the demand prices go up, as they should. And lets not forget that several countries have already moved to recognise crypto-currencies as legal tender, so demand is increasing by reaching wider portions of consumer market.
As for crashes, to the best of my recollection, all major ones were caused by panic selling following news of major hacks (https://storeofvalue.github.io/posts/cryptocurrency-hacks-so...) or rumours of impending legislative crackdown in China and now in the US.
The intrinsic value of crypto-currencies is in the platforms that support them, so not only the market cap but also what the project stands for and what it can deliver in terms of market proposition, for instance:
- Ether is used to pay for resource utilisation on the Ethereum platform which I use to develop smart contracts, but the Foundation is re-inventing the internet so that's how I value the currency.
- Monero, ZCash are in the forefront of cryptographic research and are some of the most accessible and privacy protecting financial instruments available so that's how I value them.
- Bitcoin is all about economic resilience and self-sovereignty, unfortunately the in-fighting is bound to decrease its usefulness.
(edit: formatting)