This is a 2 piece article discussing the Bicoin bubble. Please read Part I here.
–this article shouldn’t be taken as financial advisement as it represents my personal opinion and views. I have savings invested in cryptocurrency so take whatever I write with a grain of salt. Do not invest what you cannot afford to lose and always read as much as possible about a project before investing–
How will cryptocurrency change jobs and economies worldwide?
In order to get to the bottom of that question, first we need to worry about adoption.
I personally believe there are 3 reasons that could lead to potentially increasing worldwide adoption of cryptocurrency:
- A Better User Interface;
- A Better redistribution of money;
- Continuous decentralization.
If you think I forgot about scalability, transaction fees or block size, please rest assured I haven’t. To me those aren’t real problems; as the network grows in security (more miners), user adoption and developer community, I believe we will see those issues getting resolved. Some others will appear, of course, but that’s the nature of innovation.
You need to break stuff in order to build new things so it’s not the tech problems that frighten me, to be honest; the values and paths we choose to support our decision-making, that is what concerns me. But we’ll get into that in a bit.
So, why is User Interface at the top? Simple answer: would you be able to use the internet without DNS being active?
Killer user-friendly apps, which make the bridge between the infrastructure and the user are the key which might unlock this puzzle.
The first real challenge is making cryptocurrency indistinguishable from digital fiat-currency. We need ways to safe-guard users from making bad decisions, like not keeping their private keys safe, accessing websites via ads, or keeping their entire assets in a single place. To achieve that, we have two main schools of thought to follow.
- Learning by doing or,
- Regulating the markets.
As regulation is usually the way to avoid, especially during the early development stages of any novel technology, we should educate people and allow them to make bad decisions.
It’s hard to lose your money, I have been there (many times before). I’ve also been scammed, tricked, made bad decisions on where to store my money, lost private keys and so on. What’s the only good thing about it? Each time I failed I learned something that helped in the future.
What “experts” usually don’t tell you is that you shouldn’t be afraid to fail, especially if you’re starting in a new field.
Consider the following: the sooner you fail the sooner you learn. This is, if I had not made all those mistakes back in the day, I would probably do them later on. And I could have lost way, way more money!
The hardest lesson we all learn with time is that there are no safeguards in real-life. A stupid comment on twitter can lose you your job; a click in the wrong ad can infect your laptop; just being in the wrong place at the wrong time can change your life drastically.
We need to accept we don’t control most things that come our way.
The only thing that matters is whether we’re prepared to deal with them or we’re not. One thing I’m pretty sure of: blocking people from investing, reasoning it’s in their best interest, is just plain wrong.
Unless the same rules apply to other markets.
Like, oh I don’t know. Gambling?
Why Is Making Bad Choices That Important?
Firstly, in order to learn, most people need to do stupid stuff and make incredibly irrational decisions.
Secondly, regulation needs to adapt to a new reality, because:
If it’s OK to gamble, it should be OK to buy cryptocurrency.
If it’s OK to share my data with the highest bidder, it should be OK to let me monetize it as I see fit.
Thirdly, everyone makes bad decisions at some point. No exceptions here. If someone tells you how certain they are about something, run away as fast as possible.
Honestly, nothing in life is certain, much less an unregulated market like crypto.
Sometimes, even the greatest people make the most stupid mistakes.
Do you follow, for example, the brilliant Andreas Antonopoulos? Did you know his co-author on “Mastering Bitcoin”, a blockchain bibble for so many crypto-enthusiasts, was the person responsible for creating Parity? Which got hacked not so long ago?
The harsh truth is that people make mistakes and bad things happen. What really matters, at least to me, are the intentions and values on which decisions were made.
Either a commercial airplane pilot who wasn’t able to account for time correctly and crashed a plain; or a doctor who failed to correctly diagnose a disease killing a patient, people make bad decisions sometimes, that lead to destructive outcomes. Those events, however, can have a positive impact on future generations, because Human Beings have the capability to learn from them.
Critical thinking is key, as we cannot impose too many regulations on something that is already internally regulated. That’s why Bitcoin works, as its internal consensus mechanics promote good behavior and punish bad actors.
If you wonder why we might need to slow down on regulation think of what the current state of finance is doing to the world. There is a clear separation and segregation of classes as the rich can invest while the poor can only work for a pay-check.
Screw that. Make money work for you. This is not a new idea, not even related to cryptocurrency at all, but it’s an important mindset to have. Maybe the story of rich-dad, poor-dad can be an inspiration to you, regarding how to look at money.
Now, let’s get back on track to the question at hand.
How can we better redistribute money?
Bitcoin initiated a process of rewarding participants for securing the network. That’s already pretty cool and quite an achievement, but we need to aim at doing it better. Right now you need special hardware to maintain the security of the network. In time, I hope the mechanics change in order to allow for more people to be rewarded for maintaining the network’s security. Real change, in my opinion, will come from different proof-of-consensus. For example, there might be a different implementation that requires all participants to secure the network. This is, anyone who participates needs to validate transactions at some point, getting rewarded to do it.
Currently ,the logic dictates you need to spend energy to maintain the network’s security, which is a fair trade-off. But other logics might appear with different goals. What if instead of energy you staked your time or attention?
If everyone agrees to a change in the protocol rules you can potentially just fork bitcoin into a new proof-of-work mechanic, rewarding everyone who already participates in the current bitcoin blockchain (like bitcoin cash, private, gold etc).
There are of course opinions against keeping doing hardforks, as it potentially steals hashing power from the main network. But hey, that’s a feature of decentralization. People should be able to do whatever they want. If someone believes they have a better way of reaching consensus, let them try.
If the overall goal is to improve the network, adoption and user reward I hope people try new things, as it’s the only way to achieve the best possible outcome for everybody.
Tokenizing the world economy
Another potential solution is if businesses everywhere start adopting a different mentality. What if instead of giving people equity, you can give them a direct way to make money by using your product/services? I understand it’s hard to conceptualize a token which has no real value, as it’s not connected to an organization’s equity, but try to see it from a different perspective: you can now purposely give away tokens to users, for free, as they use your product or service. Those tokens could let them vote upon governance, reward them with a fixed income or allow them to donate back tokens so you can build new features or maximize your business utility.
The goal here would be to directly redistribute gains, for example, among the people who support your network: users.
Those users can be anyone, your suppliers, buyers, employees, investors, etc. Everyone who interacts with your business could potentially be rewarded for participating.
Imagine not having just a source of income, but potentially dozens at the same time, just from sharing your data, buying products, using services or interacting with a network. We could completely shift how the world works by literally giving back to your network. We now have a chance to shift from measuring wealth in profits to measuring wealth in network users. Because all users would have tokens!
As crypto-assets are inter-changeable, everyone can easily exchange them for digital cash. Or any other digital asset you see fit. Maybe instead of having 150 currencies, we will end up with hundreds or thousands of digital assets, all of which could potentially be exchanged amongst themselves.
We now come to the final point that can greatly influence overall adoption.
Decentralized Protocol Layers
Only with standardized and trusted contracts deployed, which use a very easy and friendly interface, we actually have a chance of people trusting the entire system. It’s pretty cocky to say “the blockchain can’t be hacked” when software and websites built over it, can.
For more than 2 centuries we had a system that only worked in some parts of the world, it wasn’t all inclusive, it was permissioned by required people to identify themselves and did not work 24/7 nor did it reward participants.
-Come to think about it, no one born after 2008 will ever live in a world where fiat-money is the only option. That’s reassuring-
Things have changed and we all must make an effort to turn this market into a huge success. From investors, to developers and from miners to users, it’s up to all of us as individuals to promote good agents and to punish bad actors.
Don’t forget: the more selfish your actions are the worst the overall outcome for the most. I understand that for some of us to win, others need to lose; that’s just how balance works. Except this time the winners can be the many and the losers the few.
I know it’s a bit of a stretch, but who knows? With a different attitude comes a different outcome.
Is Bitcoin a bubble?
No. Our immense greed and lust for money is. If you fear the market will collapse think of the Internet bubble.
Do you remember how it ended?
No bubble will destroy bitcoin, we’ve been there already.
Now, if there is a bubble it means we weren’t able to control our greed for quick profits and allowed for enormous over-valued silly projects to emerge.
Just like during the 2000s.
Seems to me Bitcoin isn’t the mother of all bubbles.