Notes

Bitcoin Thrives Against All Odds
As it's currently en vogue right now, I'd like to announce I'm launching my own cryptocurrency next week.

Let's call it "kingcoin."

Nah, that is far too self-serving.

How about "muttcoin"? I've always had a soft spot for mixed breeds.

Yeah, that's perfect - everybody loves dogs.

This's the biggest thing since fidget spinners.

Congrats! Everyone reading this is planning to receive one muttcoin when my new coin launches next week.

I'm going to evenly distribute one million muttcoins. Feel free to spend them wherever you like (or wherever anyone will accept them!).

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What's that? The cashier at Target said they wouldn't accept our muttcoin?

Tell those doubters that muttcoin has scarcity value - there'll only ever be 1 million muttcoins in existence. On top of that, it is backed by the full faith and credit of my desktop computer's eight GB of RAM.

Also, remind them that a decade ago, a bitcoin couldn't even buy you a pack of chewing gum. Now one bitcoin is able to buy a lifetime supply.

Plus, like bitcoin, you can store muttcoin safely offline from thieves and hackers.

It is essentially an exact replica of bitcoin's properties. Muttcoin has a decentralized ledger with impossible-to-crack cryptography, and most transactions are immutable.

Still not convinced our muttcoins will be worth billions in the future?

Effectively, it's understandable. The truth is, launching a brand new cryptocurrency is significantly more difficult than it appears, if not downright impossible.

That's why I believe bitcoin has reached these heights against all odds. And because of its unique user network, it is going to continue to accomplish that.

Without a doubt, there have been setbacks. But all of these setbacks has subsequently resulted in higher prices. The latest sixty % plunge is going to be no different.

The Miracle of Bitcoin

Bitcoin's success rests in its ability to make a worldwide community of users who are either happy to transact with it right now or even store it for later on. Future prices will be dependent on the pace that the community grows.

Even in the face of wild price swings, bitcoin adoption continues to grow at an exponential rate. There are 23 million wallets open globally, chasing twenty one million bitcoins. In a several years, the number of wallets are able to rise to include the 5 billion people on the planet connected to the internet.

Sometimes the new crypto converts' motivation was speculative; other times they had been trying to find a store of value away from their own domestic currency. In the last year, new applications along the lines of Coinbase have made it even simpler to onboard new users.

In the event you have not noticed, when people buy bitcoin, they talk about it. We all have that friend who bought bitcoin after which wouldn't shut up about it. Sure, I am accountable for this - and I am certain quite some readers are too.

Perhaps subconsciously, holders become crypto-evangelists since convincing others to buy serves their own self-interest of increasing the value of the holdings of theirs.

Bitcoin evangelizing - spreading the good word - is what miraculously resulted in a price ascent from $0.001 to a current price of $10,000.

Who could have imagined that its pseudonymous creator, fed up with the global banking oligopoly, launched an intangible digital resource that rivaled the value of the world's largest currencies in under a decade?

No religion, political movement or technology has ever witnessed these growth rates. Then again, humanity has never ever been as connected.

The Idea of Money

Bitcoin started as an idea. To be clear, all money - whether it's shell money used by primitive islanders, a bar of gold or possibly a U.S. dollar - started as an idea. It is the notion that a network of users value it equally and would be prepared to part with something of equal value for the form of yours of income.

Money has no intrinsic value; its value is purely extrinsic - just what others think it is worth.

Check out the dollar in your wallet - it is a fancy piece of paper with an one eyed pyramid, a stipple portrait and signatures of people which are important.

In order to be useful, society must view it as a unit of account, and merchants must be ready to accept it as payment for services and products.

Bitcoin has demonstrated an uncanny ability to reach and connect a system of millions of users.

One bitcoin is just worth what the next person is willing pay for it. But if the system continues to grow at an exponential rate, the limited supply argues that prices are only able to move in one direction... higher.

The Bottom Line

Bitcoin's nine year ascent has been marked with enormous bouts of volatility. Therewas an eighty five % correction in January 2015, plus several others over 60 %, including a colossal ninety three % drawdown in 2011.

Through each one of these corrections, however, the network (as measured by number of wallets) went on to expand at a quick speed. As some speculators saw their value decimated, new investors on the margin saw value and became buyers.

The abnormal amounts of volatility are actually what helped the bitcoin network grow to 23 million users.

Hey, maybe we simply need a bit of price volatility in muttcoin to attract new users...

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