Bitcoin, being only a young 6-year-old currency, is already considered late and lifeless by lots of fault-finding and critical minds. Still, all the negative forecasts fall short of the only fact that the technology underlying Bitcoin will not disappear even if the digital currency itself don’t stay alive. Surely, the technology is likely to become even more powerful because many better and newer versions will be developed.
Doubters say that bitcoin is just a new disruption that can interest both innovators and vendors. In fact, the main question is how can a currency which is not backed by any government, and whose value is not stable at all, expect to substitute the dollar?
The authors of the book “The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order,“ Paul Vigna and Michael J. Casey, wrote an article dedicated to the topic providing a simple answer to that question:
“No digital currency will soon dislodge the dollar, but bitcoin is much more than a currency. It is a radically new, decentralized system for managing the way societies exchange value. It is, quite simply, one of the most powerful innovations in finance in 500 years.”
Another question is how may bitcoin be valued if it’s not, let’s say, backed by gold? How can it be worth anything?
The authors of the book “The Age of Cryptocurrency” explain the nature of bitcoin which is made up of bits and bytes and compare it with physical currencies which are being symbols or tokens in the system and representing a standard of value for tracking wealth assets. Related to that, it can be said that the invention of mysterious Nakamoto is an online and completely public system which deals with the essence of money in a direct way.
But still, Bitcoin cannot be considered a digital counterpart of a dollar bill. It exists as entries in an accounting system called “blockchain” that “records balances and transfers among special bitcoin “addresses.” If you have bitcoin, it doesn’t mean you have a digital equivalent of the banknote in a digital pocket; it means that you’re claiming to a bitcoin address, having a secret password, and the possibility to send its funds to somebody.
It’s known that bitcoin’s open-source and copyright-free core software is being developed and improved constantly. Thus, it’s available to anyone who wants to copy it, develop some apps for it or advance it.
It’s essential to say that in its current state, Bitcoin has some irrefutable drawbacks. The main flaw is its fluctuating and swinging price. It’s anonymous and that’s why it attracts drug dealers. Moreover, Bitcoin “wallets” are exposed to cyberattacks. Unfortunately, it’s able to discard lots of jobs as well.
Speaking about Bitcoin’s good qualities, the two Wall Street Journal bloggers stress the fact that the technology “could slash trillions in financial fees; computerize much of the work done by payment processors, government property-title offices, lawyers and accountants; and create opportunities for billions of people who don’t currently have bank accounts.”
“At its core, crypto-currency is not about the ups and downs of the digital currency market,” the authors write, but “about freeing people from the tyranny of centralised trust,” write the authors.
Paul Vigna and Michael Casey conclude that we shouldn’t “put all our chips on bitcoin” for the reason of its value lowering and sum up saying that “bitcoin will end up something less than the stateless, third-party-less utopian dream of its most passionate supporters.”