Isnt Bitcoin worth millions of dollars a dream? | opinion

The author of this article, Dhruv Bansal, was originally compiled by Cobo and does not represent the views of Cobo

This article has a total of 4344 words, and the estimated reading time is 12 minutes

The original article was written on January 20, 2018. At that time, the market value of digital currency dropped from 820 billion US dollars to 420 billion US dollars within a month, and nearly 50% of it evaporated. Those media who are not optimistic about digital currency have ridiculed and ridiculed, and many new investors have regretted it so much that they have to sell it reluctantly.

Thats not the first time a digital currency has experienced a plunge, and it certainly wont be the last.

However, unlike those investors who rushed to sell, there is a group of people who are not moved by it. This group of people call themselves holders. They hold digital currencies such as Bitcoin for a long time, and some of them have already experienced several market turmoil. Why did they buy digital currency so early? Why can they remain calm in a panicked market? Are they crazy? Or is it too much faith recharge?

The reason is simple, the holders recognize the potential of the blockchain, so they take a long-term view. Just like value investors, short-term price corrections mean little to them. On the contrary, when the price of the currency plummets, they will be very excited to seize the opportunity and stock up some more coins at a cheap price.

In this article, we will compare the blockchain with two references, so that everyone can look at digital currency from a longer-term perspective.

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Growth Chart of Internet Users from 1990 to 2012

However, many people may forget that most of the initial Internet startups ended in failure, including some companies that have completed large-scale financing. Opponents of digital currency stated that the current blockchain is indeed like the Internet back then—the current bitcoin bubble and peoples enthusiasm for ICOs are just like the soaring and crashing of the Nasdaq market back then. They feel that many blockchain projects will eventually decline like Pets.com, Webvan, eToys and other companies. Therefore, investing in digital currency or blockchain startups is very risky, and we must remain rational and cautious.

But these two views are obviously wrong. In fact, comparing the blockchain with the Internet underestimates the ultimate value of the blockchain industry and its impact on the future world.

And I think that the best reference for the blockchain should not be the Internet, but the telegram! Why do you say that? Lets start by reviewing the invention of the telegraph.

Invented in the early 19th century, the telegraph was the first to introduce telecommunications technology. Through electricity, people can use private networks to transmit digitally encoded text messages instantly over long distances. The invention of the telegraph accelerated the flow of information and opened up a new field of technology.

Telecommunications Technology: The telegraph was the beginning of the telecommunications industry (leaving aside manual methods of transmitting information like firing cannons, waving flags, and flashing lights).

Digitally encoded information: Morse code can express different English letters, numbers and punctuation marks in different order, so that the telegraph can send letters and numbers very conveniently and efficiently.

Instant transmission over long distances: At the time, the speed at which data could be transmitted over telegraph lines was so fast that it was called instant (disregarding for a moment the time operators spent at relay stations).

Private Networks: Telegram networks are capital-intensive projects with limited throughput, so private owners will charge a fee for their use.

The Internet is the pinnacle of modern telecommunications and an inevitable outgrowth of the technological and social changes brought about by the telegraph since 1844.

The invention of the telephone in 1876 brought telecommunications technology to millions of households, enabling the transmission of audio data in addition to text.

In 1901, the invention of radio allowed people to transmit information through the wireless electromagnetic spectrum, no longer limited to physical wires, and radio also realized one-to-many transmission.

In 1928, the invention of television allowed viewers to receive visual information in addition to text and audio.

Cable TV in 1948 and satellite TV in 1975 used greater bandwidth and faster speeds, and supported a wide variety of content.

In the 1990s, the Internet integrated all of the above technologies, and the transmission form expanded from one-to-one, one-to-many, to many-to-many.

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No technology is isolated

Telegraph enthusiasts in the 1940s could hardly have imagined todays internet boom. The development of telecommunication technology is not isolated from technological and social change, it cannot be separated from the joint promotion of other industries (especially energy, transportation and computer industries), these industries have been formed as early as the mid-19th century. For example, without universal access to energy, humans would not be able to invent satellites and mobile phones.

The invention of the telegraph is applied to electromagnetism, crude oil needs to be refined from paraffin, and the internal combustion engine needs to be industrially produced. Various technologies cooperate with each other to create a globalized world with high-speed operation and interconnection.

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1899 painting by artist predicting future video calls

Why is telegram the best reference for blockchain?

Because the blockchain adopts a distributed consensus mechanism for the first time, using cryptography to achieve decentralized collaboration. Like the telegraph, it also opened up a whole new field of technology.

Distributed consensus mechanism: Bitcoin adopts the workload proof consensus mechanism for the first time, through the distributed ledger - transaction accounting is completed by multiple nodes distributed in different places to prevent transactions from being tampered with.

Cryptography: Use cryptographic techniques such as key pairs, hash functions, and Merkle trees to ensure the security of data transmission and access, and balance the power between attackers and maintainers, spammers and verifiers, governments and citizens relation.

Decentralization: use valuable tokens as incentives, no centralized management or third-party institutions.

So, where did blockchain come from? What will our world look like someday when the blockchain is as old as the telegraph today?

Decentralized Future vs Centralized Past/Present

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Telecom industry map before 2005

Blockchain is a distributed ledger, which has the characteristics of robustness, reliability, anti-fragility and independence. Like the telecommunications industry, the blockchain is not isolated. If we want to predict the future of the blockchain, we need to take the following industries into consideration:

Green energy can make energy renewable and recyclable, and it is also conducive to distributed management. Transmitting energy is expensive from a thermodynamic point of view, so try to keep the place where it is generated and where it is consumed as close together as possible. The energy industry has evolved from highly concentrated electricity to solar, wind and geothermal energy, not only for environmental protection, but also for unit economic benefits. Once energy can be fully distributed, the future energy system will develop into a distributed transportation network and a market for instant supply.

3D printing is still in its infancy, but it is believed that in the near future, it will fly into the homes of ordinary people. 3D printing technology has subverted the existing industrial production mode and supply chain sequence, and transferred the manufacturing process to the final link of the supply chain. Only by transporting raw materials, industrial products can be produced on site, especially some small consumer goods.

A mesh network can be viewed as a peer-to-peer architecture. The current centralized telecommunications infrastructure is too easy to be manipulated, and the future Internet needs to be built on a globally distributed point-to-point mesh network to ensure greater efficiency and security.

Today, you use the Internet to buy goods from all over the world on Amazon, and your online and purchase records will be monitored. The transportation of goods is inefficient and resource-intensive, and these costs need to be borne by consumers.

In the future, you can use digital currency to purchase product design drawings on the distributed Internet, and then use 3D printers to produce finished products. The entire transaction process will not be captured by any company. Moreover, the resources needed to produce finished products come from local green energy, which saves a lot of transportation resources and is environmentally friendly.

Global marketplaces like Amazon may then exist on the blockchain, without the need for a centralized company to operate. While there may still be substantial economies dominated by centralized multinational corporations, the structure of these corporations will be distributed.

If you think Distributed Autonomous Organizations (DAOs) sound ridiculous, think about it, Bitcoin has already achieved it. The Bitcoin network is a distributed self-governing organization. Miners mine as a proof of work to ensure the security of tokens (Bitcoins) on the network, and at the same time obtain tokens as mining income, thus forming a balanced incentive system.

In addition to storage business and payment business, many financial services can also be provided by distributed autonomous organizations (DAO), such as ICO projects, decentralized exchanges, etc. World computers like Ethereum are trying to distribute computing power, others are looking at storage, bandwidth, and data, and some nascent projects are working on identity, social media, news, property ownership , insurance and other industries. Supply chain-oriented blockchain is transforming todays transportation, manufacturing and logistics industries.

It was impossible for humans in 1844 to predict all the details of our modern world, so it is impossible for us today to predict the details of our future world. But we can look forward to a more distributed world, where centralized supply chains, social media, and energy networks will all be replaced. Blockchain and distributed technology form a self-reinforcing mechanism to change the world.

Why is blockchain important?

After centuries of technological integration and development, todays great Internet came into being. The blockchain represented by Bitcoin is just in its infancy. Comparing it with the telegram can help everyone establish a longer-term vision and understand the future development trend of the blockchain.

Amaras Law is more applicable to blockchain technology:

People always overestimate the short-term benefits of a technology and underestimate its long-term impact.

― Roy Amara

If you bought some ICO tokens yesterday and you think you will be rich tomorrow, then you are overestimating the short-term benefits of a technology. If you think that our country, global supply chains, multinational banks, oil pipelines, etc. will not fundamentally change in the next century, then you are underestimating the long-term impact of a technology. Blockchain may not fix many of the worlds problems, but it will definitely change the world.

Ok, lets talk about the price of Bitcoin (I believe this is what everyone cares about most)

Bitcoin should be positioned as a global reserve currency. Although Bitcoin is not perfect, its design is exquisite. Bitcoin has proven to be an excellent way to hedge your wealth. The emergence of second-layer solutions, such as the Lightning Network, has enabled easier and faster transactions in Bitcoin. Energy markets, social networks, the Internet, offline payments and other fields will eventually apply blockchain.

According to Satoshi Nakamotos vision, holding Bitcoin is equivalent to holding a share of the global economy in the future. This plan motivates early participants to buy Bitcoin. But ideas alone are not enough. The vigorous development of Bitcoin since its birth ten years ago is inseparable from the dedication and belief of countless blockchain evangelists and investors. If Bitcoin can develop healthily with everyones joint efforts in the future, break peoples prejudices, solve its own scalability and governance problems, and interact and cooperate with other successful blockchain projects, the price of Bitcoin will be todays price many times.

If you think that the prices of mainstream digital currencies like Bitcoin and Ethereum have little room for appreciation, and blockchain technology is close to maturity, then you are wrong. Blockchain technology is still in its infancy, and there is still a lot of room for development.

If you are worried that the price of the currency will fall as soon as you enter the market, or you are more optimistic about short-term appreciation, then you are also wrong, and you will miss the big growth benefits in the future.

The truth is, $5,000, $10,000, $20,000 in Bitcoin, or $100, $500, $1,000 in Ethereum are bargains. If the blockchain is really like the telegraph, then a technological and social revolution sweeping the world is about to happen, and it has already begun!

(The currency market is risky, investment needs to be cautious)

(The currency market is risky, investment needs to be cautious)