Will Bitcoin Be The Currency Of The Future?
Technology and banking experts explore the rise and rise of Bitcoin and where the trend is headed.
In this video Mathew Goetz, Garrick Hileman and John Biggs will talk about ‘Will the bitcoin be the currency of future?’ in Al Jazeera’s Inside Story episode.
Before summarizing the video, Let’s talk about what is Cryptocurrency and Bitcoin and what does it do?
What is Cryptocurrency?
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.
Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.
What is Bitcoin?
Bitcoin is a digital currency that was created in January 2009. It follows the ideas set out in a whitepaper by the mysterious and pseudonymous Satoshi Nakamoto.
The identity of the person or persons who created the technology is still a mystery. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and, unlike government-issued currencies, it is operated by a decentralized authority.
Bitcoin is a type of cryptocurrency. There are no physical bitcoins, only balances kept on a public ledger that everyone has transparent access to.
How does it work?
Each Bitcoin is basically a computer file which is stored in a ‘digital wallet’ app on a smartphone or computer. People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people. Every single transaction is recorded in a public list called the blockchain. It enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet.
Bitcoin is the world’s most famous and least understood currency. It has exploded in value seemingly for no reason in March, 2020. In March last year a single bitcoin was worth five thousand US dollar and in December it hit twenty thousand US dollars for the first time. Now it is forty thousand US dollars.
Cryptocurrency is the name given to any digital currency which allows people to skip middle man i.e. bank or money exchange facility it does that by a very complicated system called blockchain that’s unique to a few cryptocurrencies and is said to make them safer. Bitcoin is simply the first and also the best-known version of cryptocurrencies.
Mathew Goetz is the founder and CEO of Block Tower Capital, former executive of Goldman Sachs and former systems engineer. He talks about cryptocurrency from an institutional perspective. He calls this market cycle of cryptocurrency as bull markets. According to him a trending bull market is where people are looking for good news and data to interpret and there are real buyers and real demand. He thinks that a single bitcoin may worth hundred thousand or even more in the next 12 or 18 months.
Garrick Hileman is the head of research at Blockchain.com, visiting fellow at London School of economics and a cryptocurrency economist. According to him, Bitcoin is the first decentralized digital alternative currency or asset they have ever seen grow to this size and monetary assets.
It is by nature are difficult to value their value based on supply and demand. A lot of people reference gold and bitcoin has earned the nickname digital gold. the size of the entire gold market is 10 trillion and bitcoin today is worth less than 1 trillion about 730 billion. Roughly at present many people think that bitcoin has more functionality in many ways than gold and has a tighter scarcity. Eventually it will actually surpass and eclipse gold’s total market value at some point. Currently Bitcoin is the largest cryptocurrency that is a type of decentralized online currency.
John Biggs is the editor in chief in Gizmodo and former editor at Coin desk. The people who have invested in 2010 or early on they are now making millions but it is pretty impossible for a person at the current hype cycle unless that person is insider. According to him it will not be wise to buy bitcoin now.
In contrast, Mathew Goetz says that the industry has been matured over time and bitcoin has been matured as a financial asset and now there are institutional demands. Mathew said the market infrastructure is based on real things while John said it is not. Some people now see bitcoins as a safe long-term investment despite its volatility. Some experts say that injection of stimulus has made it more attractive.
Garrick Hileman believes that cryptocurrency can be a hedge a defense against inflation when countries have governments around the world anticipating a recession may be tipping over into a 1922 style depression where they have to start printing more money to get it into the system because people around the world because of covid-19 are losing their jobs this quickly for a long time.
John Biggs says that cryptocurrency can not be used as a defense to fight inflation or depression because the governments are not investing more on cryptocurrency but they are investing very little that too inactively. On the contrary Mathew Goetz thinks that currently insurance companies, public companies are buying it and ultimate sovereigns and governments will buy and invest in it too.
If people leave their money in the dollar, they are going to lose half of it over the next five years with the rate of monetary expansion so when they have a hard asset like Garrick Hileman was mentioning like bitcoin that has finite supply that can’t be inflated away by a politician a central banker, they will tend to invest in it.
Big brands like PayPal are now allowing users to trade using cryptocurrency like bitcoin. People in poor countries with a little or no infrastructure can now still do banking and live in a cryptocurrency world. According to John Biggs in developing countries people can do banking in many other ways without using cryptocurrency.
Historically cryptocurrencies have been quite volatile so, people need to be aware of not only its volatility but also of complexity of using this technology.
0:00 – What is Cryptocurrency?
8:00 – Market Cycle of Bitcoin and Infrastructure
14:15 – Should People invest in it?
18:00 Can cryptocurrency can be used as a defense against inflation and depression?
22:00 Challenges of Cryptocurrency