Think of:
- Decentralized currencies that can be stored safely away from crooked banks.
- Decentralized financial (DeFi) accounts(loans & savings) that the government cannot block or touch in any way.
- Decentralized websites, domains, files. Think of a Twitter or Facebook that cannot be censored or taken down if people don't like what is being said.
- Decentralized untraceable VPN connections.
- World wide wireless mobile phone and Internet services.
- Blockchain Voting where the whole world can audit elections.
- Blockchain tracking of the global supply chain, so you know what you are getting is legit.
The possibilities are truly endless!
Bitcoin uses a method called proof of work which is very processor intensive and doesn't scale very well. It also not considered a green technology because so many computers are competing together it ends up being a war and the computers pools with the most power win.
Newer coins and tokens use a better method called proof of stake. Validators pledge their tokens which locks it up in the ecosystem to help support the project and stabilize the network. The validators get block rewards in proportion to the total active pledge in the pool. This is then split amongst everyone's active stake in the pool.
Each token has it's own rules of governance and tokenomics. So they have different interest rates and you may get every higher interest rates depending on the exchange/broker or network that you are staking with. Check Coingecko and the tokens website for more information.
Bitcoin is backed by the people that own Bitcoin and have faith in its value. There's nobody at the top of Bitcoin and there aren't any levels so it can't be a multi-level marketing scheme. This is what I think of when I think of a pyramid scheme.
Is Bitcoin the story of the greater fool, known as the "greater fool theory"? I don't think so. Bitcoin is the crucial building block, the foundation so to speak, to building something greater. So people are betting that the value of Bitcoin will rise as people build more and more on top of it, creating more and more value.
Bitcoin is definitely not a tulip bubble because you cannot make more Bitcoin. There will never be more than 21 million Bitcoin. But you can just make more tulips, so tulips have very limited value once the market equalizes. Some people have said well they can just change the code, but it would take a majority of miners to agree to that and they would not agree to it because it would dilute the value of their investments. If it did happen there would be a fork and Bitcoin would continue on while this other currency veered off, like Bitcoin Cash, Bitcoin SV, etc
I would say it's more akin to gold, simply it has value because people say it has value. Gold is basically worthless, copper is a better metal for conductivity and there are plenty of other metals that glisten when polished. The only thing the makes it valuable is its scarcity. So I think this is why Bitcoin has value is because there is a limit quantity of it in existence. And it was the first to market, so has first mover advantage for now.
Bitcoin was introduced to the world during the financial crisis of 2008. The accelerated printing of fiat money since then has caused the continued increase in value of Bitcoin. The United States printed more money in June of 2020 than in the first two centuries after its founding and it's accelerated since then. We are in uncharted waters as far as fiat money goes. The Feds current mantra is that we cannot default on our debt because we can just print more. But what happens when people stop buying that debt? Most people don't think of dollars in that way, but the dollars in your wallet are debt. The United States printed money and had a bond offering for people and other countries to pay for that printed money. We continue to cycle those bonds with interest into perpetuity. As the U.S. continues to print money people will start to look elsewhere for stability. I believe the U.S. and other countries around the world have been studying Bitcoin and other ways to make digital currencies for quite a while and they know the gig is almost up, so why not just make the people happy and helicopter money everywhere?
I believe a great reset is coming to the world and crypto currencies are the solution to that. Money is power and there is going to be a great struggle over that power in the coming decade. The governments are looking into electronic currencies that will track your every move. We need to as a community stay WAY ahead of the governments of the world and change the entire financial system before they know what hit them.
I keep hearing over and over again how Bitcoin is private and so there are a bunch of illegal activities going on through it. But this is simply not true, Bitcoin is not private at all. All crypto exchanges with a physical presence in the United States must comply just like a bank with Anti Money Laundering (AML) and Know Your Customer (KYC) laws. The criminal activity in 2020 through Bitcoin was 0.34%, yup that's just 1/3 of 1%. In contrast, the U.S. dollar is the number one used currency for all world wide illicit activity!
There is a company called Chainalysis which analyzes transactions for businesses and governments around the world. They can basically trace every transaction you do in the crypto world unless you are using a privacy coin. And to combat that the U.S. has forced all exchanges here to not offer privacy coins.
Privacy coins are seeing an uptick of criminals sending money into those networks. Though there's nothing governments can do preventing anyone from transacting in privacy coins like Monero and Z-Cash and I would expect a huge increase in their use in the future. Anyone can trade Bitcoin for a privacy coin and then the world is your oyster.
According to the SEC Bitcoin is a currency but Ethereum and Ripple are securities. “Cryptocurrencies are replacements for sovereign currencies…[they] replace the yen, the dollar, the euro with Bitcoin. That type of currency is not a security,” -Jay Clayton SEC Chairman
However, because using Bitcoin for mass market purchases remains a new endeavor, Polotsky says, “It is unclear how the federal government will treat such purchases.
Is Bitcoin the currency of the future? No! There are two big problems with bitcoin as a currency: its value is unstable and its transaction processing is too slow. There is the Lightning Network that never seems to be completed that could one day provide the fast transaction processing part, but nobody is going to transact in a currency that milk costs 10 Satoshi's one day and 15 the next.
However I believe that some day decentralized stable coins such as DAI, Reserve, UST and other coins could one day become currencies. The Federal Reserve does not hold a monopoly on money. Before World War I private banks used to issue their own currencies. There are also many community currencies today.
Central Bank Digital Currencies (CBDC) could usher in a new era of negative interest rates. Where you would pay the bank to hold your savings. You might have an account directly with the central bank instead of going through a commercial/private bank like today.
CBDCs will be used to track your every move. The argument from the uninformed would be if you have nothing to hide then what does it matter? Imagine a world where if you ate a double cheese burger twice in a week and that your health insurance would rise. If you bought too much of something your state deemed bad, say alcohol, they could just turn your account off with a flip of a switch.
CBDCs would be able to tax you however they want during the transaction. Currently you only have to sum up your taxes once a year or quarterly in most cases allowing you to compound your money in the process.
CBDCs will take away your Fourth Amendment rights, "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." They will be able to search at will through everything you do. They will be able to seize or lock your money with a touch of a button, faster than they can now through banks. It's one leap closer to 1984 by George Orwell.
I would will not use CBDCs unless they are forced down my throat and even then I will convert to something else that has value. Whether that be decentralized digital currencies or physical property.
Bitcoin (BTC) basically cannot be changed at this point. It's been tried before with current forks that are out there. Bitcoin Cash (BCH) forked off from BTC to have a larger block size of 32MB. Another fork was attempted off the BCH blockchain to what is known as Bitcoin Satoshi Vision (BSV) which has an even larger block size of 128MB. BSV is also fraught with controversy surrounding Craig Wright and nobody wants to touch it with someone else's money, haha!
Craig Wright, claims to be Satoshi but cannot prove it, has recently filed a lawsuit against BTC and most of its forks (BCH, BSV, BCH ABC, etc) demanding that the developers change the code and give him access to BTC he claims was stolen from his computer and the keys erased in 2020. He wants access to the original coins and all of the forked coins. Basically he wants the immutable ledgers rolled back to that point in time. What he still doesn't seem to understand is that the community does not have to take the code updates and there isn't a force powerful enough on this planet to make 51% of the BTC mining pool comply! BTC has already gone through multiple unsuccessful forks in the software and remains miles ahead of anyone that has tried to fork it. In an ironic twist the Bitcoin addresses in question were connected to the Mt Gox hack and implicates him or his company as the hackers. Which in turn is going to backfire with a ton of lawsuits on him whether or not he is successful in obtaining access.
Bitcoin was just the very start of crypto currencies. Some would say the mother of all coins. But it's the alt coins that are truly changing the world. Ethereum introduced smart contracts in which you could start taking over other financial services besides just a currency or store of value like Bitcoin. A smart contract is a set of instructions that removes the need to trust a bunch of people in the process. Think of the process of getting a loan, or purchasing a good or service. It created the ability to have decentralized applications that people can trust based on the underlying smart contracts. This allowed Ethereum to become too big too fast and it brought the network to its knees. The combination of the Defi craze and the NFT craze has caused fees on the network to be so high that normal people no longer want to transact on Ethereum and it's having an impact on the entire ecosystem that runs on it.
This is basically where we are today. There are a ton of new competitors trying to be the next Ethereum. Networks like Cardano and Polkadot are completely new solutions from the ground up with better scalability in mind. Then there are others like Cosmos, GoChain, Polygon, etc which are trying to run on top of Ethereum and have block chains of block chains. Basically each DApp could have their own blockchain that it can do its transactions in a much cheaper manner and then have checkpoints of all transaction submitted on the Ethereum block chain making them work together. This is a very generalized overview of it and I encourage you to do your own research to learn more about how everything works.
More and more companies will start by an Initial Coin Offering (ICO) governed by a Decentralized Autonomous Organizations (DAO). Existing companies stocks will be wrapped into smart contracts and be bought and sold instantly with finality. Savings accounts in the offline world are called Staking Accounts in the crypto world. Staking actually provides interest payments because they can provide all sorts of things like; liquidity to keep prices stable, direct funding of loans, insurance pools, and on and on.- The deed to your house, car notes, etc will be Non-Fungible Tokens (NFTs) that can be bought and sold instantly. This opens the world of crowd lending to everyone for everything.
- NFTs are being used for art to ensure the original artist gets continued revenue from the buying and selling of their works and the price increases that go with it. This will eventually include art pieces, movies, songs, books and anything else that has a creative value.
- One of the biggest threats is that government could outlaw their use or through over regulation.
- Some crypto currencies could phase out in favor of other crypto currencies.