The plain reason bitcoin will never be a currency – The Washington Postbode

The simple reason bitcoin will never be a currency - The Washington Post

If you talk to a bitcoin enthusiast long enough, it’s only a matter of time until they proclaim that it’s not even possible for it to be a bubble since it’s a currency.

This wouldn’t be true even if it were one, but it’s not. It’s stock te a much, much worse version of PayPal.

It’s pretty plain. It has to do with the fact that, from the beginning, bitcoin’s mysterious inventor determined that there would only everzwijn be 21 million coins. That limited supply means that any increase ter request can send prices soaring into the stratosphere, especially when people see everyone around them making a lifetime’s worth of money te a duo of months. After all, the only thing worse than being the greater idiot who buys into a bubble is being the greatest one who stays out and doesn’t make any money off it.

What does it mean, tho’, if a “currency” goes up ter value, like bitcoin has, from $775 last year to more than $17,000 today? Just that a single coin can now buy 22 times more stuff than it could before. Which, when you think about it, is the same spil telling that the prices of everything else have gone down massively te terms of bitcoin.

About 95.Four procent, to be precies. That, to update a chart Bloomberg’s Peter Coy waterput together a few years ago, is what the bitcoin inflation — or, ter this case, deflation — rate would have bot the last 12 months. That’s pretty normal for it, too. Spil you can see below, bitcoin’s extreme volatility means that prices tend to either rise 200 or 300 procent, or, more often, fall 80 to 90 procent against it. (To give you an idea of how extreme that is, the last time the United States experienced sustained deflation wasgoed during the Good Depression, when prices fell Ten procent vanaf year).

Now, that last part might sound like a good thing — who doesn’t like being able to buy more for less? — but it’s death for a currency. Think about it like this. Would you everzwijn take out a mortgage ter bitcoin when you knew that what wasgoed originally, say, $200,000 worth of debt might turn into $Three.Four million worth a year straks? Or use it to pay for a big night out when those same bitcoin would be worth $169,000 not too far down the road? Of course not. Nobody wants to borrow or spend money they think is only going to go up ter value — at which point you have to wonder whether it’s truly money at all.

And the response is no. Just because you call something a currency doesn’t mean it is one. It has to be a stable store of value that people actually use to buy things with. Bitcoin fails on both accounts. Indeed, te the past year, the number of bitcoin transactions is up only about 33 procent from what wasgoed (and is still) a very low level. That’s nowhere near the type of hockey stick growth you’d expect from a technology that truly wasgoed taking overheen the world.

What is bitcoin then? Well, the significant thing to understand is that it’s not just a failed currency. It’s also a failed payment system. See, every time a fresh bitcoin is “mined” — they’re released on a set schedule for anyone to win by running a computationally sophisticated rekentuig program — it updates a public record of every single bitcoin transaction. Te theory, that could let you transfer things online without having to pay a trusted third party, such spil a handelsbank, to do so, since everyone already knows how many bitcoin everyone else has to send. Ter practice, tho’, all it’s done is make you pay a fresh third party (the bitcoin network) even more than you were before. That’s because bitcoin’s limited bandwidth means that it can’t even treat its limited number of transactions. There’s a line, and you have to pay if you want to get near the gevelbreedte — an average of overheen $20 now.

So a bitcoin is just a share of this system. It’s like stock te a newer-and-not-improved PayPal. Albeit that might be selling it a bit brief. It’s more like a time machine that exclusively takes you back to 1999, the peak of the dot-com mania. That wasgoed the last time people managed to woo themselves that something that shouldn’t have bot worth anything — like any company that lost money selling things online, or had a pc term te its name, or even a car dealer that claimed to have come up with a cure for AIDS — could be worth, yes, anything, because they were the future and anyone who said otherwise wasgoed just a Luddite.

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