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Did Bitcoin achieve what it was intended for?

No sooner the tech geek community got a hang of it than we had every other person creating its own cryptos, these were used as transferable digital currency within their own network or raising funds like an IPO

Bitcoin was set as one pivotal invention of our era. Since its inception Bitcoin has been a topic of discussion, one of the main reasons was its unique characteristics like how it’s been generated, safety, anonymity, simplicity in usage, and so on. No sooner the tech geek community got a hang of it than we had every other person creating its own cryptos, these were used as transferable digital currency within their own network or raising funds like an IPO.

Invented with one thing in mind, a single currency for transactions across the globe. The idea was simple and great, but as we moved forward since its inception in 2009, can we really put our foot down and say that it has achieved its creator’s vision?

What’s happened since its inception?

The Great Decline of 21 –

Today Bitcoin has been the talk of the town more than ever, mainly due it is huge dip of around 40% (an all-time high). It was not only the dip that was talked about but what caused it, while the Chinese announcement was the last straw and as its said “broke the camel’s back”, Bitcoin and other crypto were already on a decline from since 2nd week of May-21 when Elon Musk announced that the electric carmaker won’t be accepting Bitcoin as payment (a reversal of an earlier decision)

Non-regulated exchanges –

MT. Gox a bitcoin exchange based out of Tokyo, Japan. Launched in July 2010, by 2013, and into 2014 it handled over 70% of all bitcoin (BTC) transactions worldwide. In February 2014, Mt. Gox suspended trading, closed its website and exchange service, and filed for bankruptcy protection from creditors. In April 2014, the company began liquidation proceedings. Mt. Gox announced that approximately 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time.

The 21 Million concern –

To the common belief, the number of bitcoin in circulation is limited, only 21 million. Well, this can be true or not based on how we look at it, as we all know bitcoin runs on a programming language and any modifications to its code have to go through a consensus mechanism to get it to approve too (similar to its transactions). So if a group of programmers decided to increase the number of bitcoins in circulation, it can be achieved by reaching a consensus between the programming community

Global currency or global trading instrument/ commodity?

Since its inception, the very first transaction was carried out by a person to buy a couple of pizzas (the value of BTC transaction -10,000 BTC). Post that it’s in news either for its use in criminal activity such as Silk Road and Ransomware (due to its complete anonymity), or its daily increased valuation (currently pegged at 48,000 USD). Then we have investors who are stocking up bitcoin, the top 5 investors whom we consider rich in the crypto world have accumulated a total of ~ 250,000 bitcoins among them

valuing over 10 billion USD, whereas the bitcoin founder has a million bitcoin set aside for himself. And finally who can forget the famous pump-and-dump scheme by a famous personality just a few days back.

In one of his old interview by Aswath Damodaran with Bloomberg, said: “If you put the currency in the pocket and you forget about it for a year, and then at the end of the year, if you put it out then it shouldn’t have lost half its value”. The level of volatility shown by it over short periods is not the characteristics of a stable currency, but of speculative investments and trading instruments. Bitcoins are accepted at very few places, even where accepted a currency whose value can swing 10 percent or more in a single day is impracticable as a means of payment. Due to these reasons added with the bans on cryptocurrencies often changing, it has become more and more difficult for crypto to attain global acceptance.

The Imitators –

Today we have around 5000 different crypto’s which are being traded compared to 180 fiat currencies (government-issued currencies like INR, USD), and with more and more technology giants moving towards creating and promoting their own crypto’s that number is going to rise.

To summarize let’s consider the following points;

1. Today we have more crypto in the market than fiat currencies. Every other day we see a rise of new crypto, a classic example dogecoin and its sudden rise

2. No guarantee on the safety of your crypto, as we saw what happened with Mt Gox. And the failure of too many Initial Coin Offerings (ICO’s) 418 of the 902 ICOs in 2017 has already failed.

3. Value is undecided, which crypto is rated higher or traded the most depends on the set of people backing it (how is it different from the use of fiat currency)

In conclusion, we need to wait and watch whether it reaches its intended objective or not, but the way it’s going the signs don’t look good.

Source: Business World

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