I’d like to announce that I’m launching my own cryptocurrency the following week because it’s currently in style.
Let’s call it “kingcoin.”
That’s too self-centered, I think.
How about “muttcoin”? My affection for mixed breed animals has never changed.
Yes, that’s ideal because everyone adores dogs.
The biggest thing since fidget spinners is going to be this.
When my new coin launches the following week, everyone reading this will receive one muttcoin as a congratulations.
I’ll distribute 1 million muttcoins equally. Feel free to use them anywhere that will accept them, or wherever you like!).
What’s that, the Target cashier said they wouldn’t accept our muttcoin?
Tell those skeptics that muttcoin has a value of scarcity because there will only ever be 1 million in circulation. Additionally, the 8 GB of RAM in my desktop computer stands behind it with all of its might.
Also, remind them that a decade ago, a bitcoin couldn’t even be used to purchase a pack of gum. A lifetime supply is now available for one bitcoin.
Additionally, just like bitcoin, you can store muttcoin offline in a secure location away from hackers and thieves.
It closely resembles bitcoin’s properties. Muttcoin uses uncrackable cryptography in its decentralized ledger, and all transactions are unchangeable.
Still doubt whether future valuations of our muttcoins will reach billions of dollars?
It makes sense, I suppose. Launching a new cryptocurrency is actually much more difficult than it seems, if not outright impossible.
I think bitcoin has succeeded in this despite all odds because of this. And it will keep doing so because of its distinct user network.
Certain setbacks have occurred. But eventually, each of these setbacks led to higher prices. The recent 60% drop will not be any different.
The Miracle of Bitcoin
The secret to Bitcoin’s success is its capacity to establish a world-wide network of users who are either eager to use it now or reserve it for the future. The rate at which the network expands will dictate future prices.
Bitcoin adoption is still increasing exponentially in spite of the extreme price swings. There are currently 21 million bitcoins available in the world’s 23 million open wallets. The 5 billion people on the planet who have access to the internet could have their own wallets in a few years.
Sometimes the motivation of the new cryptocurrency converts was speculative, and other times they were looking for a store of value other than their own local currency. It has become even simpler to onboard new users in the past year thanks to new applications like Coinbase.
If you haven’t noticed, when people purchase bitcoin, they talk about it. We’ve all had friends who bought bitcoin and then wouldn’t stop talking about it. Yes, I do this, as are many of my readers, I’m sure.
In an effort to increase the value of their holdings, holders may unconsciously encourage others to purchase cryptocurrencies.
The miraculous rise in price from $0.001 to the current price of $10,000 was caused by Bitcoin evangelizing, or spreading the good word.
Who would have thought that, less than ten years after its pseudonymous founder launched it, an intangible digital resource would rival the value of the world’s largest currencies due to his frustration with the global banking oligopoly?
These growth rates have never been seen in any technology, political movement, or religion. However, humanity has never been more interconnected.
The Idea of Money
The concept of bitcoin was first. To be clear, all money, whether it be gold or silver bars, shell money used by islanders in the wild, or U.S. dollar – started as an idea. It is the notion that a network of users values it equally and would be willing to exchange something of equal value for your form of currency.
Money’s value is entirely extrinsic—it is only worth what other people believe it to be—and lacks any intrinsic value.
Look at the dollar you have in your pocket; it’s just a fancy piece of paper with the signatures of influential people and a one-eyed pyramid.
Society must accept it as a unit of account for it to be useful, and businesses must be willing to accept it as payment for goods and services.
Bitcoin has shown an uncanny capacity for connecting a network of millions of users.
A bitcoin is only worth what the person buying it will agree to pay. The limited supply, however, argues that prices can only move in one direction if the network keeps growing exponentially… higher.
The Bottom Line
Extremely volatile periods have characterised Bitcoin’s nine-year ascent. There were a few corrections over 60%, including a massive 93% drawdown in 2011, and an 85% correction in January 2015.
However, the network (as indicated by the quantity of wallets) kept growing quickly despite each of these adjustments. New investors on the margin saw value and became buyers as some speculators saw their value decimated.
In reality, it was the unusually high levels of volatility that enabled the bitcoin network to reach 23 million users.
Hey, perhaps Muttcoin just needs a little price volatility to draw in new users…