the future platforms of digital work and commerce are being forged today
cryptocurrencies
video primer
Commodity
Some people view Bitcoin as a digital store of value, similar to gold in the physical world. While Bitcoin is more volatile than gold, both are considered non-inflationary. Bitcoin is limited to 21 million coins total, and gold is mined at a rate of about +2% per year.
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Both Bitcoin and gold are globally fungible commodities. Their authenticity is easy to verify, and their prices are quoted in real time for buying and selling. Bitcoin, like gold, is seen as an irrefutable bearer instrument, meaning its existence isn't affected by government policies. However, government bans and taxes can make both Bitcoin and gold difficult to use in certain jurisdictions.
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Bitcoin enthusiasts believe these shared traits could make Bitcoin similar to gold as a hard currency—a store of value that cannot be deflated, isn't consumed in industry, and doesn't degrade over time.
Currency
Due to Bitcoin's highly secure but computationally intensive proof-of-work blockchain minting process, it is mainly considered a store of value. This is similar to gold, which is intensively mined and serves as a foundational store of value for people, institutions and countries
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There are crypto projects that offer second or third layer networks based on Bitcoin (as the first layer). These protocals are specifically designed to reduce Bitcoin’s blockchain congestion, akin to the friction associated with using gold as currency (its difficult to transact frequently in either small or large amounts with bitcoin or gold). These second layer networks move transactions off-chain, greatly speeding up transaction times. Additionally, these layer 2 applications may help with Bitcoin's final settlement issue. While instant settlement is powerful feature of BTC, it can be problematic if funds are sent to the wrong party. Layer 2 off-chain protocols could delay or circumvent immediate and final settlement, increasing Bitcoin's practical usage.
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However, this raises the question: Are there tried and true digital mediums of exchange, like bank wire, ACH, credit cards, or other altcoin projects, that are better suited as transactional currencies? Such currencies would need to double as a meaningful store of value and offer transaction settlement that is inexpensive, secure, and fast. Several altcoins aim to meet these requirements, and if any of these projects can move value faster and more securely than current centrally settled and sovereignly issued currencies, they could offer a decisive advantage even over Bitcoin.
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Having exposure to cryptocurrencies is a way to participate in the potential rise of one or more virtual currencies while reducing reliance on traditional fiat currency.
Revolution
As more commerce and work move into the digital arena, the ability to securely and quickly move and settle large sums of economic value across borders will become crucial. This need will be just as important as monetizing massive volume micro-transactions in the Internet of Things (IoT) era, where chips embedded in every device exchange vast amounts of data seamlessly and securely in near real-time at the micro-value level.
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The question is whether central bank-issued digital currencies can meet this growing need, or if an emerging altcoin will surpass Bitcoin's security and acceptance while addressing the various use cases demanded by future technologies. Crypto proponents are confident that a decentralized, emergent software solution will be the irrefutable winning technology for these upcoming commercial needs.
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As the digital economy evolves, being part of this potential revolution by investing in cryptocurrencies could be a strategic move, positioning oneself for the possible rise of a dominant virtual currency in the future.
Notice
Investing in cryptocurrency assets involves a high degree of risk and is not suitable for all investors. Before deciding to invest in digital assets you should carefully consider the potential of losing 100% of your investment.
