How is cryptocurrency worth anything? It isn’t backed by anything right?
I am taking a little bit of wisdom from Crypto Revolution, By Mathew Aaron
Lets just say that you wanted this book of his? And you had a quesadilla in your fridge that I wanted? I could tell you “If you give me that quesadilla, I will give you this book.”
The value of that quesadilla is now backed by the value of this book.
But it only works if you want the book and if I want the quesadilla.
In this book he talks about the value of gold as an analogy with a few major bullet point.
Scarcity (A finite amount of Gold. Once it’s gone its gone forever)
Resource intensive (It has to be mined)
Usefulness (durable, pliable metal. Used as a conductor for super computers or to be worn as a status symbol)
Scarcity (eg: There will only ever be 21,000,000 Bitcoin. Scarcity Built right in.)
Resource intensive (It has to be mined/ Proof of work)
Usefulness (brought the world blockchain technology. Has almost unlimited applications in today’s world)
I am still really kind of confused about how all of this translates into a monetary value but I don’t really have to understand all the intricacies of how I breath either. But I am able to do it just as well as someone who went to school for 10 years, to become a doctor, who could tell you in great details all of the ins and outs of the human respiratory system .
So I am going to keep learning. Not so that I can do it any better than anyone else. But because I enjoy it and it intrigues me.
Is blockchain tech going to be the currency of the future? I am not exactly sure at this point. Bitcoin has been jumping around from 10,000 to 12,000 quick a bit over the last few weeks.
I am not even sure if I can say that it is a good investment because of the volatility.
If you had invested into Bitcoin in say 2009 when it was dirt cheap and held onto those coins until now, 2019 you would have made a pretty good chunk of change.
I would imagine that if you had a small amount to invest and were constantly keeping an eye on the market you could sell at the highs and buy at the lows if you were willing to take the risk and were familiar with the flags and walls of the stock market