Written by Altus on Tuesday 7 June 2016
For something to have value its supply must be limited and it must be difficult to copy. Think of gold, diamonds and currency notes. These all have value because supply is controlled and they are hard to come by. This gives them value, but it also means there is a significant incentive to counterfeit cash or search for new mineral deposits.
But, what if there is a thing that is impossible to copy, a substance which is so rare that there will only ever be 21 million produced, and even when some get lost, they will never be replaced. They cannot be forged, copied or controlled by any government. A substance that is so light and undetectable that all 21 million could be held in the palm of your hand.
And yet, you could take this substance, break a bit off, give it someone else, and they could pass it on a thousand times. Then, when you get it back, you can identify it as the original piece of that bit from which it came.
Bitcoin – the wood from the trees
While many financial service companies and venture capitalist seek use cases from the blockchain, maybe they are missing the bitcoin golden goose that sits right under their nose. True, bitcoin has a reputation to deal with – after all it is the currency of the Dark Web and the criminal underground. But, it is also rumoured that the 500 euro note was created to compete against the dollar in the underground cash economy. An economy, which comprises 20% of European GDP and which has a significant and positive impact on the official economy. If you want a currency to be taken seriously, then it needs to compete in the ‘hard cash’ economy – and that means the wealthiest individuals and the criminal economy – those with cash to stash.
From dark net to clear net
With the international underground economy becoming digitised and the inherent security of bitcoin, perhaps its future glitters more than gold, and in a world where there is talk of another economic shock on the horizon and rumours that there is more paper-gold than real gold will the next rush to safe harbour currency investments see cash rich individuals bolt from bullion and dash to bitcoin?
In the near future, investors may well conclude that the safest place to put their wealth isn’t in a bank, but on a memory stick.