The Death of Bitcoin - Fact or Fiction?

I don’t normally write about Bitcoin or cryptocurrency at all. I leave that to others who are far more qualified than I to explore the ins and outs of mining and trading crypto. I merely trade my SBD for Bitcoin when the price is right, wait for the inevitable rise in value and sell some as needed while keeping some in my stash, err wallet.

But I’ve been reading more and more articles from economists and stock experts and financial mavens who keep predicting the death of bitcoin every time the price dips below some preconceived “barrier”. Yet something struck me the other day. Facebook lost more value in a couple of hours than the entire market cap of Bitcoin. Yet no one predicted the demise of Facebook, or the end of other companies in the same market niche.

Could it be that those who are screaming gloom and doom may not understand blockchain technology or cryptocurrency at all? Or perhaps are so entrenched and dependant on existing companies and technologies and networks that they are severely threatened by crypto?

I began looking a bit closer at WHO was predicting the end of Bitcoin. One of the most strident voices against Bitcoin are representatives of the Bank for International Settlements — the central bank for domestic central banks worldwide. Since the blockchain and cryptocurrency itself is a decentralized system, that does not rely on borders or banks, crypto transactions don’t need banks or International Settlement agencies.

Yup, I can understand the fear the international finance market would feel about the change crypto has brought to the world of international finance, and I can’t imagine they would write any glowing articles about the promise and future of Bitcoin!

There are many articles bashing crypto coming from the stock and security traders of Wall Street as well.

“Bitcoin isn’t like money”.

Well, it isn’t SUPPOSED to work like current fiat money! It isn’t backed by a government thus it can’t be manipulated and inflated or devalued at will.

“Bitcoin consumes too much energy and is too costly to mine”.

But I see where most operations are being conducted where electricity is cheap, not in the middle of an urban area where power is in high demand and expensive. Other cryptocurrencies are using “proof of stake” rather than “proof of work” which consumes even less power. And let’s not forget the energy use of the current financial system.

“In his analysis of bitcoin’s sustainability, Harald Vranken estimates the entire banking system, including ATMs and bank branches, use 650 terrawatt-hours of energy per year.

The most current and widely cited estimates put bitcoin’s yearly energy use at somewhere between 4 and 35 terrawatt-hours.”
PRI.org

650 terrawatts vs 35 terrawatts? So much for the power consumption myth.

Then there’s the speed argument. “Transactions are soooo slow!” As the technology behind the blockchain has improved, Bitcoin’s average transaction speed is now pegged at around 10,000 transactions per second. Other cryptocurrencies are able to process even more transacations per second and new technologies are shooting for processing millions of transactions per second.

Visa processes between 2,000 and 24,000 transactions per second, depending on which source is reporting the numbers. The higher numbers tend to come from Visa processing companies, the lower numbers tend to come from third party testing groups.

No matter what Visa numbers are, or any bank transaction numbers for that matter, because transaction speed is vital to the network, blockchain and crypto developers have made improving the transaction speed a number one priority.

Because development of the blockchain technology is not locked into any central corporation, or dependant on proprietary systems or code, I suspect transaction speed for crypto will continue to improve rapidly. The same can’t be said for hide bound banking institutions!Open source systems that rely on independent developers tend to find solutions quicker than megacorporations with proprietary code.

And then there’s my favorite from the financial “gurus” -

Let’s put that into perspective. In the past month Bitcoin is up $1327 USD. Seven shares of Google (roughly the equivalent of one Bitcoin) has a difference between high and low for the same month of $1183. Pretty close to Bitcoin’s increase. While Bitcoin may fluctuate more widely day to day, or even hour to hour, taken over time, it isn’t that far off from the trading pattern of many tech stocks.

I am led to the conclusion that many of the financial pundits simply don’t understand blockchain and crypto tech and are trying to compare it to the very financial systems it will replace. Those who do understand how this technology will change the world of finance are reacting out of fear, much like the entrenched business groups that were being replaced by more modern, efficient technology have always reacted to every social and technological revolution throughout history.

No matter what they write, no matter how many people they try to influence, change will happen. Crypto will change the world of finance just like the blockchain will change business systems and the very internet itself. As for me, I will continue to happily accumulate crypto, engage with blockchain apps, and move on with the changing world.

All images courtesy of Pixabay.com