Because it’s a trend right now, I want to announce that I will be launching my own cryptocurrency next week.
Let’s call it “kingcoin.”
Nah, that’s too self-serving.
How about “muttcoin”? I’ve always had a soft spot for mixed breeds.
Yes, that’s perfect – everyone loves dogs.
This could be the biggest thing since fidget spinners.
Congratulations! Everyone reading this will get a muttcoin when my new coin launches next week.
I will distribute 1 million muttcoins equally. Feel free to spend them wherever you want (or wherever anyone will accept them!).
What’s up? The cashier at Target said they won’t accept our muttcoin?
Tell the doubters that muttcoin has a scarce value – there are only one million muttcoins in existence. On top of that, it is backed up with full faith and credit to the 8 GB of RAM on my desktop computer.
Also, remind them that a decade ago, one bitcoin couldn’t even buy you a pack of chewing gum. Now one bitcoin can buy a lifetime supply.
And, like bitcoin, you can store muttcoin safely offline from hackers and thieves.
Basically it is an exact copy of bitcoin properties. Muttcoin has a decentralized ledger with impossible-to-crack cryptography, and all transactions are immutable.
Still not convinced that our muttcoins will become billions in the future?
Well, it’s understandable. The truth is, launching a new cryptocurrency is much more difficult than it appears, if not downright impossible.
That is why I believe that bitcoin has reached these heights against all odds. And because of its unique user network, it will continue to do so.
Sure, there are setbacks. But each of these failures eventually resulted in higher prices. The recent 60% drop is no different.
The Bitcoin Miracle
Bitcoin’s success depends on its ability to create a global network of users willing to transact with it now or store it for later. Future prices will be determined by the rapid growth of the network.
Even in the face of wild price swings, bitcoin adoption continues to grow at an exponential rate. There are currently 23 million wallets open worldwide, chasing 21 million bitcoins. In a few years, the number of wallets may increase to include 5 billion people on the planet connected to the internet.
Sometimes the motivation of new crypto converts is speculative; other times they seek a store of value away from their own money. In the past year, new applications like Coinbase have made it even easier to get new users on board.
If you haven’t noticed, when people buy bitcoin, they talk about it. We all have that friend who buys bitcoin and then won’t shut up about it. Yes, I’m guilty of this – and I’m sure quite a few readers are too.
Perhaps subconsciously, holders can be crypto-evangelists since convincing others to buy serves their own interest in increasing the value of their assets.
Bitcoin evangelism – spreading the good word – is the miraculous reason behind the price increase from $0.001 to the recent price of $10,000.
Who would have imagined that its pseudonymous creator, fed up with the global banking oligopoly, would launch an intangible digital resource that rivals the value of the world’s largest currency in less than a decade?
No religion, political movement or technology has witnessed these growth rates. Again, humanity has never been more connected.
The Idea of Money
Bitcoin started as an idea. To be clear, all money – whether it’s the money used by the ancient islanders, a gold bar or the US dollar – starts as an idea. This is the idea that a network of users equally values it and is willing to part with something of equal value for your form of money.
Money has no intrinsic value; its value is external – only what others think it is worth.
Look at the dollar in your pocket – it’s just a nice piece of paper with a pyramid eye, a stipple picture and signatures of important people.
To be useful, society must view it as a unit of account, and merchants must be willing to accept it as payment for goods and services.
Bitcoin shows a unique ability to reach and connect a network of millions of users.
A bitcoin is only worth what the next person is willing to pay for it. But if the network continues to expand at an exponential rate, the limited supply argues that prices can only move in one direction… higher.
The Bottom Line
Bitcoin’s nine-year rise has been marked by several bursts of volatility. There was an 85% correction in January 2015, and several others over 60%, including a massive 93% drawdown in 2011.
Through each of these corrections, however, the network (as measured by the number of wallets) continues to expand at a rapid pace. While some speculators saw their value eroded, new margin investors saw value and became buyers.
The abnormal level of volatility is what actually helped the bitcoin network grow to 23 million users.
Hey, maybe we just need some muttcoin price volatility to attract new users…