A spoon of tar for BitCoin

On Habré there were many articles about this wonderful currency, but more and more from a technical point of view. I want to consider the very essence of bitcoins.



For understanding, I propose to compare Bitcoins with the currency of modern states.



The state currency is a certain conditional unit of material values, which (ideally) cannot be falsified, and which is accepted for exchange on the territory of this state. And sometimes beyond.



Formally, we can call currency anything if we are ready to accept it as payment. In this, the supporters of bitcoins are right. Since mankind has departed from the gold supply of currencies, their value is determined solely by the ratio of supply and demand.

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Those. A currency must have two minimum properties:

1. Genuine (limited offer).
2. By demand.

It is clear with genuineness - no one wants to keep their savings in something that anyone can stamp in any quantities.

Demand is also not difficult - if there are a lot of people willing to accept currency as payment for real material values, then everything is in order.

Many articles have been written on the topic of the authenticity of Bitcoins, there is an algorithm and, in general, a lot of information. So this point can be taken as the truth.

The demand for bitcoins is now provided by a powerful wave of popularity on them. Popularity is growing, the number of bitcoins is limited, the cost rises sharply. Hysteria begins between those who buy Bitcoins and those who are afraid of them and do not trust them.

Is it worth trusting them?

At first glance, it seems that Bitcoins are much more reliable than, for example, dollars. The Fed can print as many dollar bills as possible and bring down the exchange rate. Question: “Why?” We don’t ask - let’s imagine that idiots are sitting there. It is impossible to technically produce any bitcoins. The generation algorithm will not allow this.



That is, bitcoins have a clear advantage over state currencies in terms of predictability of supply - no one can ever overwhelm the market with additional issue. And it is impossible to fake Bitcoins today. There remains the option of a market collapse, if someone pulls a very large amount of bitcoins out of the stash and starts actively selling them, but this is unlikely, and such a collapse will be temporary. So, bitcoins are protected from dropping prices by a sharp increase in supply. Great!



Now let's look towards demand.



Bitcoin is provided only by the fact that there are people who want to buy it. Supporters immediately begin to shout that with the dollar and the euro is the same. But for some reason they forget that the US is behind the dollars, and the European Union is behind the Euro. These are two very powerful organizations, which by their influence guarantee the demand for currency. Zimbabwe, for example, does not have any influence, cannot provide demand even within the country and suffers from rabid inflation. Like many other states.



Roughly speaking, the dollar is not secured with gold, but with Tomahawk missiles - its course depends on the military, political and economic influence of the United States. Similarly with the Euro and Europe.



And we see that the exchange rate depends on the state of the policy and the economy of the country, which acts as a guarantor. Did trouble happen in the USA? Oops, the dollar is falling. Is there a local crisis in Europe? Euro is also sent there. At the same time, fluctuations of the course are observed not too strong, since people believe that the guarantor of currency demand will eventually solve their problems, and the situation will improve.



And then it's time to ask the question - and who is behind the bitcoins? Who is ready to supply demand with his influence? According to the ideology of Bitcoins - no one. Their demand is provided by individuals who are willing to buy them. This is the most controversial moment in the idea of ​​bitcoins. Why should I buy and store something that does not have its own value, and no one guarantees me that in 5-10 years will give me in return, for example, a loaf of bread? Or a brand new Mercedes. Or something else nice.



The belief of supporters of bitcons is based on the fact that there will always be a lot of them, and it is better that their number will constantly grow, ensuring an increasing demand.



What events can prevent this?

• Discrediting the bitcoin itself. If someone thinks that the recent “bounce” about the fact that the algorithm was hacked was the last one - do not flatter yourself. The attacks will be regular, because This allows you to earn good knowledgeable people. If one day the “force of impact” is poorly calculated, then a landslide can become avalanche, even those who have no doubts about the reliability of bitcoins today. This is not economics, but pure psychology - the crowd is running, I need to run after it. The larger the crowd, the weaker the voice of reason.
• Legislative restrictions. More than once, there were statements in the style: “Bitcoins help sponsor terrorism!” As well as drug addiction, pedophilia, organ trafficking, the extinction of the Usurian tigers and anything else. The bottom line is that if bitcoins in any country want to outlaw, there will be no difficulty with this - there is no reason to take it, but they have no strong advocates.
• The appearance of analogues. Technically, nothing prevents the emergence of a currency similar to Bitcoin. This is a marketing question only - if you manage to convince people that your currency is better than that - some bitcoin users will spread to it. Its real differences do not play a role - a couple of minimal pluses, a powerful advertising campaign, several pseudo-incriminating articles about bitcoins - and the result will be.
• The invasion of scammers. Bitcoins are like cash. How to give, and lost. No refund or cancel transaction. Tracking payment fraud is impossible. Grace for scam and deception. If there are too many of them, people will be afraid to use bitcoins.
• Real hacking algorithm bitcoins. At this stage of development of computer technology is impossible. But, the same thing you would have been told in the 90s, looking at the characteristics of your current laptop. And if you showed your mobile phone in the 80s, you would have been mistaken for an alien. We admit that we have no idea what technologies will be in 10-20 years. Probably, such that will kill bitcoin.

So, what conclusions did I draw for myself?

Bitcoins are a cool toy. If I suddenly have an extra pair of thousands of dollars, I will play with them on the exchange. Maybe I’ll buy a couple of Coin when they’re in recession to sell them in a couple of months.



But I will never invest the last penny in them or use them for long-term storage of funds.



And, yes, if I ever go crazy and deal with terrorism, drug trafficking and homicide, the Bitcoins will become my best friends.



PS All these conclusions are nothing more than my personal opinion. I will be sincerely happy to discuss this topic and listen to alternative points of view.