Bitcoin was born on 3rd January 2009, when her genesis block (block zero) was mined. The first transaction took place on 12th January between “Satoshi” and Hal Finney. Bitcoin’s first “value” was set as 1309.03 bitcoins for $1. That’s right, it was a fraction of a paisa! And now as she prepares to become a teenager, Bitcoin is valued at over $44,000 and has even become legal tender in one country! So what do I hate, love, and fear about Bitcoin?
What I hate about Bitcoin
In my personal opinion, Bitcoin is lousy as a medium of exchange. It is very volatile and suffers from slow transaction speeds. Compare it to UPI payments in India and Bitcoin seems like a cruel joke.
It makes no sense to use Bitcoin for payments in any country. There are so many better alternatives available in the crypto world. You could use dollar-pegged stablecoins. You could use hush/ privacy coins like Monero or you could use regular old coins like Litecoin. All of these are faster, cheaper, and less volatile.
The second thing I hate is the concept of HODLing — holding on for dear life. There are so many memes about this that many people think it’s actually a good investment strategy! The concept is that if you buy a little bit of Bitcoin and hold on to it forever, then you will become super-rich. I wish life were that easy.
This Internet meme shows what HODL really looks like
The third thing I hate is the concept of “buying the dip”. This means that every time that Bitcoin prices dip, you buy more Bitcoin. This is an extension of HODLing. It means that you believe that Bitcoin prices will keep rising forever. So every time prices dip, you buy more.
‘Buying the dip’ is now being turned into memes
The fourth thing I hate is Bitcoin maximalists. They believe that Bitcoin is the only viable digital asset and all other cryptos are sh*tcoins. They are oblivious to the massive innovation being done by Ethereum, Cardano, Solana, Polkadot, Theta, Filecoin, and so many other awesome crypto projects.
What I love about Bitcoin
In my personal opinion, Bitcoin is great as a store of value.
A store of value is an asset whose value either remains the same or increases over time. Some of the most popular stores of value are precious metals, real estate, treasury bills, and even art.
If Bitcoin becomes globally accepted as a store of value, then in my personal opinion, its total market cap would equal that of gold.
Depending upon your source of information, the market cap of all the gold in the world is between 8 to 10 trillion dollars. So the long-term marketcap of Bitcoin could be between $8 to 10 trillion.
Considering a maximum supply of 21 million bitcoins, I think a fair long-term price would be somewhere between $380,000 and $476,000. I expect to see this price by 2030 AD.
This is subject to two critical caveats — the blockchain technology is not “broken” and no meteor crashes into our lovely planet 🙂
What I fear about Bitcoin
Bitcoin is totally dependent upon technology. If a major flaw is found and exploited, then Bitcoin will immediately lose its value and would crash to zero.
While blockchain is a robust technology, it has been hacked in the past — on 15 August 2010 when a transaction created 184,467,440,737.09551616 Bitcoins.
That’s more than 184 billion! Yes, you read that right. We all know that the total number of bitcoins that can ever exist is 21 million. But here we suddenly had hundreds of billions of bitcoins!
The problem was solved within a few hours. This “bad” transaction does not exist on the blockchain anymore. Neither do the billions of bitcoins created by the hackers. But 0.5 bitcoins that were consumed by the transaction still exist and are indelible proof of bitcoin’s hack!
Can another successful hack take place? Of course, it can. And that’s what I fear the most.
Rohas Nagpal is the author of the Future Money Playbook and Chief Blockchain Architect at the Wrapped Asset Project. He is also an amateur boxer and a retired hacker. You can follow him on LinkedIn.
Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.