Bitcoin is dying, and here is why!

Guest Author | May 28, 2015 | 4:30 pm
Bitcoin is dying, and here is why

Bitcoin is dying, and here is why!

Guest Author | May 28, 2015 | 4:30 pm

Have you ever wondered why even after six years of invention, the decade’s most disruptive mode of payment has failed to gain public acceptance? Many would say that high volatility and scams and thefts are scaring away the masses – I too agree with them – but this article is about that one thing that mostly misses the list.

Bitcoin is not a financial asset, it’s a currency!

Bitcoin was never intended to be an investment-grade financial asset, on which you could employ a “buy low, sell high” approach. It was developed as a decentralized medium of exchange, which does not depend on third party processing, and magnificently outdoes the traditional payment methods in terms of cost, time, and reliability.

But, too much emphasis on the price of Bitcoin is only fueling speculative bets in the financial market, essentially contributing to the high-risk nature of the nascent technology. There are many investors who bought into the digital currency thinking that one day this “future currency” will gain mainstream adoption and put before them huge piles of cash. We all know how the prices have crashed, right?

This speculative, asset-based attitude is taking away the crucial chance from Bitcoin to cultivate into a true currency like USD.

The Gresham Law Explanation

In economics, there is Gresham’s Law which states that, “when you have two currencies, people tend to hoard the one with greater material value and spend the one with less material value.

Considering this principle, if people have speculative expectations from Bitcoin and perceive it as an investment tool, they will hold on to it while increasingly using the US dollars to pay their bills, buy food and go shopping. As a result, Bitcoin loses another opportunity to establish itself as a mode of payment.

Conclusion

If you want something that appreciates in value, consider investing in stocks, real estate, and precious metals. The sooner the people realize this, the sooner they will spend Bitcoins in daily routine. I am sure Bitcoin-related companies, who are unaffected by price crashes, realized this a long time ago.

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  • Noah

    This article is really dumb, stop naming things, “Bitcoin is Dying”. Come on, we see this crap everywhere. The problem you have described is not the death of bitcoin, but a reason for its “slow” adoption. Furthermore, many of us dont feel that bitcoin is being slowly adopted. What did you expect, that over night every person in the world with switch over to bitcoin? That is absurd, almost as absurd as your entire article. I expect more from this site, but I guess I should not.

    • DougNJ

      I still know of people and friends that do not have a computer. They all have cell phones, not smart ones.

  • Greg Matthews

    Too many times, I read stories or pure cheerleadering and pump. Those are the posts that get pushed to the top of the bitcoin news channels. Sometimes the truth is difficult for people to accept, especially when they are invested financially in their beliefs and concepts. People that have invested in Bitcoin might not like your article. But that doesn’t make your words less valid or true. Thank you for these refreshingly intelligent insights.

    • Nikhil

      Thank you Greg, for your positive comment. I am glad you liked the article, and I did expect a lot of Bitcoin lovers (mostly who were financially invested) to trash the article. But, your comment is very uplifting.

  • Michael Cote

    If Satoshi viewed it only as a currency he wouldn’t have put a cap on the limit and made it deflationary. There’s absolutely no reason why it can’t be used for both. People will spend when the price rises. This article is stupid.

    • Monk฿TC

      i agree this is a stupid article and clever title to try and get some boosted views and traffic – plus the damn trolls are out here… fuck this article! You are dying… not bitcoin.

      • rich godman

        Blue language and the dread “troll” defense when you can’t make an intelligent insightful counter point. This is why BTC is dying a slow painful death.

        • Monk฿TC

          not exactly, you’re just an idiot, troll and not worth my time or energy.

          • Monk฿TC

            or bitcoin.

          • rich godman

            So then why do keep replying with your obvious shilling of a bs product no one wants then?

        • Monk฿TC

          you are an idiot – probably a paid troll, if you hate BTC so much – why you hang out on these sites and comment all the time. You are a fucking paid troll you piece of shit, if I ever see you in person… I will spit on you.

          • rich godman

            Zip it. Your precious btc is quite a downward spiral. It’s because of fools like you it sucks.

  • Dissonance

    If you are going to title your article that bitcoin is dying you better provide a strong argument to back your claim but all I see is a short piece on bitcoin speculation. Bitcoin transaction volume, adoption and investment have never been higher. You miss the whole point of bitcoin, the technology is life changing no matter what the bitcoin price does. Alot of really smart guys have agreed enough with that fact to dump alot of money into it. Also, since you mentioned price, bitcoin is up substantially over the past 5 years despite the recent crash. I think if you are going to write an article about bitcoin price it would be fair to mention that.

    • Nikhil

      There are better chances of those smart guys investing into the underlying technology i.e. the blockchain and not Bitcoin itself.
      “bitcoin is up substaionally over the past 5 years despite the recent crash.” – I cannot just talk about those who bought when the Bitcoin price was nothing … a majority of the investors entered late into the party and have suffered huge losses.

      • Dissonance

        That’s true but it can be true for all asset classes. You recommend stocks but anyone who purchased an index fund in late 2007 and sold in early 2009 took huge losses. You can take any asset class cherry pick a timeframe and claim it was a bad investment. Everytime an asset crashes people come out and say hah I told you was dead but that is usually a good buy signal. Remember that bitcoin went from ~30 dollars to .25 cents at one point everyone thought it was dead then too. I think its perfectly fair to say bitcoin is an asset bubble but you had not stated any evidence that it is dead. The fact is that investment is high, transaction volume is rising and adaption is increasing. If the reverse were true then you might have an argument.

      • rich godman

        !00% correct sir.

  • jackaz

    You’re correct that BTC is not a currency, yet. Although it has most of the qualities of money – durability, divisibility, portability, utility — it utterly lacks stability. In fact, it behaves exactly like a commodity. At some time in the future, its value may stabilize against other commodities, at which point it will function exactly like money.

    However, your assertion that BTC is dying lacks substance. The blockchain is a revolution. It is the genie released from the bottle, Pandora’s open box, the toothpaste squirted from the tube. We can never go back. BTC may never function as money, but its function as an open, world-wide ledger will fundamentally change the nature of businesses ranging from stock exchanges to notary public.

    • Nikhil

      I definitely agree with you that blockchain is a revolutionary technology, and there is no denying it. I also believe that a stable value will lead to a wider adoption. But, we must also shed the investing mentality – my assertion that people will hold on to Bitcoin if they see an upside is not wrong … even the economic law verifies that.

  • Basil Alsamarai

    Clickbait article that plays unclever semantic games at the start to make bizarre claims about what Bitcoin was “intended” (?) to be, then proceeds to get Gresham’s Law completely wrong.

    • Greg Matthews

      Clickbait is like the “troll” term or the “scam” term. They’re insulting, non-descriptive, and blatantly overused.

      • Basil Alsamarai

        That’s nice. “Clickbait” in this instance refers to an article with an overly sensationalized or provocative title in order to draw attention so as to generate page views, ostensibly for ad revenue. What we have here is exactly such an article, where when you click to actually read the article, it’s an incoherent mess of word salad that does not appear to be making any coherent argument whatsoever to back up the claim presented in the title. From reading your top-level comment above, I can empathize with the fact that you’re emotionally predisposed to whatever you think this super low-quality article is trying to say, but if you believe that it’s appropriate to come at somebody critical of the content of an article that you’re cheerleading by throwing around weird superficial internet-culture based pejoratives, then I’m sorry, but you’re not somebody worth listening to about anything at all.

        • rich godman

          Your long winded post is rather pointless. Hubris much bub?

  • Gus Diaz

    Bitcoin is not dying because I purchased two rooms for four nights at the Paris Hotel the other day. Somewhere out there, there is another me doing the same.

  • Monk฿TC

    The sooner you realize to get yourself some physical Casascius coins you will be a lot richer and a lot wiser.

    • rich godman

      Will be about as valuable as car wash tokens in a couple years time unless they are made of precious metal..

      • Monk฿TC

        some are…. but thats not the point – the digital value is held under the hologram, the function of these is the same as a paper wallet – offline, safe, cold storage for your bitcoins – the reason I recommend them is they are very rare because the feds shut down casascius and so they are no longer made and always worth at least 2X as much as a ‘hot’ coin – because of their rarity. These are higher value as ‘rare’ coins or collectors coins, which make them an asset, not only for the digital value, but also the collector value. Plus if you had one, you would understand… go try and buy one on ebay – it will be very hard for your ego to spend $700 on a coin that holds $230 worth of digital value, or more, even up to $2000 for 1 coin. My buddy last year bought a 25 BTC casascius coin off ebay for $800 -his friends thought he was crazy because BTC was $6 – few months later, BTC was at $1000, and because of the rarity of that coin, it was worth double the actual digital value – $50,000 – the only coin that will ever be accepted at car washes will be the worthless Quarter, or as another worthless form of currency like you said, a token only good at a car wash… eventually car washes will accept BTC that you will send it via barcode, as with most phone/mobile based BTC transactions, until then… go try and buy one, or 10 on ebay… you will see the nice coins go for $1200+, like the silver/gold ones – yes made out of precious metal.

        • rich godman

          So lose the coin in the couch cushions and your basically screwed. delightful! Btc was never $6 bucks last year! (“My buddy last year bought a 25 BTC casascius coin off ebay for $800 -his friends thought he was crazy because BTC was $6 – few months later, BTC was at $1000,”)LMFAO!!!!!!!!! BTC Never has been a $1000 bucks either since the gox debacle! For a paid shill your an idgit! 25 of those bs tokens your shilling are worth less than $5000 if they are loaded not $50,000! even if the are one troy ounce 99.9 gold they worthless less than $25,000(no one in there right mind would have sold 25 troy ounces of gold on ebay for $800 LOL!) in value. Whooo! Haven’t laughed like that in years!
          Many decades ago a fella made his own gold ingots and sold them at value he too was shut down and the value of these things isn’t much more than the gold weight with collectors. same for you tokens your hawking, you see these prices because it’s just speculators pushing it, no real collector want’s them. If that were the case sea land coins would worth more than your crap tokens because they are much rarer and harder to get.

          • Monk฿TC

            don’t you think they thought of that?

            with a casascius ya you would be screwed just like if you lost your 1oz precious metal gold coin in the couch… but if you make your own coin cold storage, like with a SERP DIY2 COIN – you can do multi sig, where you can copy the private key printed and in a different safe place, which can also need a password from your brain, that way if you lose your coin, you have a backup of the private key, which needs a password from your brain to be retrieved, so if you make a coin like that, if someone finds your ‘worthless’ coin in the couch and even if they get to the private key under the hologram, when the swipe it into their wallet, they would need the password that you put on it, thats in your brain, so they can’t steal your coin even if you lose it, another good reason why you don’t want it to be made out of precious metal. the value is digital, so the material its made of is irrelevant, and good storage of value, because if you do lose it, you don’t lose anything of physical value like a precious metal, which I am a fan of by the way, I just also see the value and future of cryptocurrency, its on a drip feed rollout plan now anyways, I am just trying to educate you and not prove anything wrong or right, in time, everyone will see whats going on, I don’t need to preach Bitcoin, Billion dollar CEO’s are preaching, the founder of VISA, the former CEO of Citi and Former Secretary of Treasury are all preaching… its funny really. who knows, maybe its a huge pump and dump ponzi scheme :0

          • rich godman

            First no one who holds gold is going keep it anywhere near a couch dufus! Yeesh! Also value of BTC is dropping hard these days. Why? Because it’s pointless to use as money for day to day things! You buy some btc for market value and then when you want to spend it, it has lost value and the person just lost buying power. Better to use real actual fiat. Most of those fancy btc casascius tokens aren’t even precious metal just electroplated to look pretty and shiny. As far as holograms go, I can make holograms easy. Took a class in high school holography. I see lots of fake holos on cgc and afa graded stuff quite abit.

          • Monk฿TC

            God, man… Your ignorant. Crawl back. Under your bridge, smelly troll.

          • rich godman

            I know the truth cuts you to the bone about those goofy tokens nobody wants.

          • Monk฿TC

            I don’t think you know what truth is, thats why I was calling you ignorant, troll, that means you ignore the truth and will be hurt by it in the future, only to learn your lessons through pain and hardship.

          • rich godman

            Malarkey I’m very grounded in truth and reality. Truth is you heavily invested in these farce tokens above market value because you drank the salesmen’s Kool-Aid and are trying your best to make people believe they are worth it so you can cash out. No one respects a blatant shill like yourself. I still chuckle at the bit of getting them at a rate of $800 for 25 tokens when btc was $6 and climbed to $1000 a year ago, spicing it with they are now worth $50k or some such fish tale even if they were solid gold they wouldn’t be worth that much!. That time line in your bs story just doesn’t add up at all. At no time last year was btc valued $6 bucks or $1000 bucks LMFAO!!!!!!!!!!!!!

          • Monk฿TC

            Time will tell Skippy! Guys like you should stay away from cryptocurrency and bitcoin so I can laugh at you in the breadline next year trying to sell your body for a snickers because you don’t have an e-wallet and some coin on it because you are an ignorant fool, brainwashed and stupid. You probably love the fluoride in your water too and believe you drink really clean tap water.. right?

          • rich godman

            Stay away….Why? I’m making bank shorting this crap! Every time it falls down I go up! Whale club for the win!

          • rich godman

            Anyone with brains knows fluoride leeches calcium from your bodies skeletal system. You eat lead paint chip nachos for every meal don’t you?

          • rich godman

            And btw if one btc can be broken down into 100 million units multiply by that by 21 million (2.1Qn)and then all of a sudden btc doesn’t seem so finite. I would also like to add that Kylie Jenner has 5x more twitter followers than there are bitcoin wallets.

          • rich godman

            It takes almost 5000 satoshis to equal on usa penny. Btc seems kinds small and pointless when you look at it like that.

        • rich godman

          Just checked ebay loads of these so called collectors items for cheap, $1.49-$24.99 us dollars even slabbed and pro third party graded! LMFAO!!!!!!!!!! All the Casascius ones you claim are so coveted by collectors because of their so called rarity. I’ve collected real rare coins for 40 years so I know crap when I see it!

          • Monk฿TC

            those cheapies are not real casascius coins, they are are just novelty, they contain no digital value. If it has no hologram, its not real. I don’t know why you would mention that even… thats like saying I went on ebay to get a Dyson vacuum and you see some $25 vacuum that keywords in the search title “like a dyson” – obiously you arent going to get a dyson for $25, everyone knows search manipulation with cheap chinese crap is prevelant on ebay, which by the way, ebay and paypal are splitting up, again, because paypal is right now this instant working on Bitcoin integration and when they roll it out, that would make ebay/paypal so big it would be a monopoly, so thats why they are splitting it right now, before they roll it out.

          • rich godman

            Quite a few do have the holos and are slabbed and pro third party graded, still uber cheap. Oh yeah aren’t most btc minned in china and most exchanges are in china to. So given your cheap Chinese crap line, hmmmm….

          • rich godman

            No actually paypal did it long ago through Braintree and hasn’t realty caught on just like btc flopped with overstock, way short of the mega millions they hyped.

  • Wormy

    Bitcoin is being adopted at an incredible speed. It is shocking, really… I have never heard of a currency being accepted at US restaurants and US websites aside from the US dollar in my life. Has it ever happened before in the past? Yet businesses are popping up everywhere in the last couple years! It is incredible.

    • rich godman

      What alarming speed? Very Few places take it and quite a few that a couple years ago did no longer do because of it being so chaotic. All the merchants who signed up during bitcoin bowl dropped it right after because no one really used btc in there shops. Even overstock came way short of what it expected by a huge margin. Lot’s of websites have also quit bothering with btc aswell.

  • FreeJack

    Oh yes, definitely invest in stocks…which are at all-time highs and in a giant bubble. Also real-estate, which has recovered from the crash into yet another bubble. Don’t invest in crypto, which are all currently at lows after a 1 1/2 year-long bear market.

    Fact of the matter is, there needs to be INCENTIVE for people to adopt Bitcoin as a currency and at the moment, for most people, said incentive doesn’t really exist. The number of places that accept it is still pretty tiny and for most consumers, there are major questions about why they would want to switch from what they’re already comfortable with. Most people who are into crypto are in it for one of two reasons. One, they saw the bubble in 2013 and really, REALLY hope that they can be part of the next bubble, and cash in. Two, they believe in it for political and philosophical reasons (ie: opposition to central banking and big finance). After 2013, I’d say the former outnumber the latter, now. So if the majority are only interested in “getting rich” from Bitcoin, where does that leave the people who support it primarily as a currency? Especially when there seems to be such a heavy push among many in the community (enthusiast and business alike) to expunge the Libertarian values entirely, and play ball with world governments and regulators, instead?

    There are NUMEROUS hurdles left to be overcome, before this or any crypto can come into regular use as a currency. Ease of use, IMPETUS (the “why”) and probably a global economic crisis…potentially hyperinflation of the dollar (which I believe is inevitable, at this point). The average Joe needs a BIG reason to switch.

    • DougNJ

      Getting Bitcoin out of beta might help as well. But with “decentralized”, who is in authority to sign off on it to Revision A release?

      • rich godman

        Been one seriously long drawn out beta.

  • ΔИθᴎЎϻɸᵿƧ

    It isn’t bitcoin that’s dying, it’s the U.S. dollar that is, and every other western currency, particularly the euro. The Japanese yen is down about 50% against the dollar the last couple of years as well, because politicians believe they can spend themselves into more and more debt to create prosperity, which is not just silly, but insane. As long as the dollar remains as the world reserve currency, which isn’t going to be for very much longer, and as long as it remains relatively strong against other modern currencies, then bitcoin should remain stable within the $200 to $300 range or thereabouts.

    Once the dollar loses world reserve currency status (the IMF recently paved the way for the Chinese yuan to become a reserve currency), all dollars overseas will come flooding back to the U.S. and create America’s first hyperinflationary period since colonial times. And when, not if, that happens, cryptocurrencies, gold, and silver should all take off in value, in terms of dollars. Since cryptocurrencies are so much easier to handle personally than precious metals, I believe they could very well save the western economies from insolvency if not outright bankruptcy.

    It depends upon how well older people in particular receive cryptocurrencies in general. I think the younger generations will receive them quite well, and adapt very quickly once the economy goes completely to hell. All it would take are smartphone wallets, as long as there is a functioning internet, or even a functioning intranet or localnet.

    Many older people alive today were born long before computers came into general use in the business sector in the 1950’s. They were big, clunky machines that took up an entire room, that ran on magnetic tape or punchcards. I myself was born in the early ’60’s, and went to school the same way my parents did. The only computers we had were the ’60’s mainframes that sent us to the Moon, and after that, they were only available at local universities.

    We didn’t have cell phones in class, and we sure didn’t have any personal computers to work with. I’m one of the younger baby boomers, but I also consider myself to be a part of the “transitional” generation. The internet was invented by the military (not by Al Gore) in 1969, but it would be another 25 years before the world wide web (www) appeared, when I was in my early 30’s. I have absolutely no clue about how to run a successful business online, just as a computer is a foreign object to my father. Our generations will be gone in another 50 years or so, leaving the computer literates.

    And even by then (2065), it will still be another 75 years before the last bitcoin is mined. I’m pretty sure that all viable cryptocurrencies will have a very bright future indeed.

    • DougNJ

      In nine years come block 840k 93.75% of all BTC will be disbursed. The block reward will only be 3.125BTC. By the year 2032 over 98% of bitcoin will be out there. That leaves over 100 years to release less than 2%. The last block reward will probably be 21 satoshi.

      • rich godman

        Btc will be a barely remembered thing long before then.

  • Wolfman Jack

    I agree that people tend to gravitate toward stronger currencies. That is why so many people are trying to get their hands on US dollars in Argentina. They are even willing to pay a premium for them. Since bitcoin has to compete with other currencies instead of being forced on the people by the government it was designed to be the most valuable one there is. Will people be willing to spend their bitcoins? Sure. People sell stocks all the time so they can use the profits to buy things. Does speculation hurt bitcoin? I don’t think so. I think these bubbles generate a lot of media coverage which gets more people interested, but the important thing is speculation provides liquidity to the market. So if I want to buy or sell a large amount of bitcoin to move money overseas there is a market for me to use. Would be much harder without speculators.

    • rich godman

      Speculation does hurt it hence the dropping value every single day these past few days.

  • dave Currency

    if i had a dollar for every “bitcoin is dying” article i would reitre by now

    • Marvin Martian

      You are proving his point 100%. You didn’t say if I had a Bitcoin or satoshi, you said dollar.

    • rich godman

      So you’d have lots of fiat but no BTC LMFAO!!!!!!!!!

  • rich godman

    Great write up! Same thing I’ve been telling bitcoin cultist for years. Btc is doomed if it’s not used as money for day to day things by john q public.

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