Today Bitcoin could break through the $20,000 barrier. That would be big news if only this cryptocurrency weren’t setting new highs so regularly. The whole Bitcoin and cryptocurrency ebbs and flows remain a mystery to most people. There are truckloads of media hype undoubtedly helping push demand for this puzzling commodity.
As an investment its popularity is sky high, but how many people use it to buy things?
Bitcoin and Value
Bitcoin is a currency and not just some useless entity being bought and sold in an endless game of speculative musical chairs. Does Bitcoin have any value? Those believers in blockchain technology believe it has excellent value. As a 21st century technology, it seems to have the same characteristics as the world’s oldest investment commodity: Gold.
Both these commodities take a significant amount of effort to attain. It’s impossible to create Bitcoins or gold any other way.
Labour Can be Stored as Money
To obtain gold, you need manpower and time to extract it from the ground and refine. Pretty much the same as Bitcoin. It has to be “mined” by computers and also takes energy and time to create.
Gold cannot be faked or manufactured. People have tried. Alchemists, the pseudo-scientists from centuries ago, tried to turn lead into gold using silly chemical processes. Without success, of course.
Today Bitcoin, because of the blockchain technology used, is also impossible to counterfeit. Transactions of Bitcoins are created as a public record via blockchain. The pure transparency of the process means the system cannot be cheated by making bogus copies of a digital document.
Hype or Substance?
If you look at the investment effort coupled with the robust blockchain system, add a few billion comments about the potential of it all to investors around the world, and boom! We have a commodity worth about $200 billion.
It’s not rocket science. That about covers it.
But most people want more. There must be something else to it all. What’s missing? Average folk are still left scratching their heads. It’s at this point that any similarities with gold ends. Man was able to distinguish gold from other metals because it was shiny and yellow. You can even make jewelry with it.
Bitcoin? You can’t do anything, not even touch it. Only a computer knows it’s there.
If it’s Useful, it has Value
The value and fame of Bitcoin can also be blamed on another characteristic not mentioned so far.
It’s the first of its kind.
But being the first one to make such a big splash on the market has no long-term value. Bitcoin has bragging rights. But ask the founders of MySpace, or a few other products that were the first of their kind to hit the market then disappear, or never made it all, whether that guarantees success.
There are new cryptocurrencies with even more sophisticated and unique characteristics appearing continually. Technology advances will make sure of that.
There will be a Second Coming After Bitcoin
There will be, if there isn’t already, a cryptocurrency that will take the model given to us by Bitcoin another step further. Its value will come from having an actual purpose.
For example, one of the leading characteristics of gold is that it is easy to make into jewelry.
The rules that ensure everybody has equal access to the internet is supposedly coming to an end as the U.S. Federal Communications Commission will soon repeal the law. But a decades-old technology, called mesh network, is finding a new life amongst blockchain enthusiasts. If the average internet user has to pay more for an ISP service, you can bet that mesh-networks will be a way to fight back.
Blockchain and Mesh Nodes
If net neutrality is abolished, blockchain technology could take its place. It could be an Ethereum-based system running in the background of any mobile device. Using an interconnected series of smart contracts, the mobile device could theoretically be turned into Wi-Fi enabled node which would help expand the mesh network’s reach.
All this could be incentivized with a blockchain based ‘meshcoin.’ Does that mean Ethereum and mesh networks are a great combination? It’s early days. The possibilities are endless. But as one expert observed, the mesh coin concept seems a little misguided. Mesh nodes need to be reasonably close to each other geographically. Blockchain nodes do not.