My purpose for this column is to supply quite a lot of enterprise information, viewpoints and knowledge that readers would possibly discover helpful, thought-provoking or entertaining.
This week’s column fails miserably.
That is as a result of my sole focus is on cryptocurrency, one thing I imagine most readers will discover to be largely ineffective, wholly irrational and a reasonably tedious learn.
It is a topic I by no means actually needed to deal with. My perspective towards cryptocurrency has been this: If I might ignore it lengthy sufficient, it could – like so many different dangerous concepts – simply fade into obscurity. However very similar to Amy Schumer, cryptocurrency is clearly going to be round for some time.
After years of summarily deleting lots of of cryptocurrency-related PR pitches from my inbox, what prompted me to come back face-to-face with the subject was a latest evaluation by RewardExpert, which mentioned Georgia was one of many high three states for “cryptocurrency infrastructure.”
The online-based navigator of frequent-flier and affinity card applications arrived at this conclusion as a result of the Peach State has 24 Bitcoin ATMs. “Georgia has essentially the most places the place you possibly can routinely convert cryptocurrency into chilly exhausting money,” the corporate mentioned.
If certainly one of these 24 machines is within the Augusta space, I actually have not seen it. And I am prepared to guess none have been seen exterior the Interstate 285 loop. However the agency’s examine illustrates simply how a lot consideration is being paid to one thing that 75 p.c of individuals have by no means heard of, 85 p.c do not perceive and 99.9 p.c have not used.
I generally assume the one purpose we preserve speaking about digital cash is as a result of the zero.1 p.c of People who write for techie magazines and blogs are obsessive about the notion that an unregulated and borderless digital forex will remodel the worldwide financial system. Or at the very least allow them to purchase medicine on-line.
Resolve for your self by taking a better take a look at Bitcoin, the oldest and most well-known cryptocurrency. It has had a whole lot of press in latest months as a result of its “worth” famously skyrocketed from 6 cents a coin in 2009 to greater than $16,00zero final yr.
First off, Bitcoins should not actual cash – these images of shiny, metallic cash you see on the web are promotional gimmicks. Bitcoins should not “authorized tender for all money owed, private and non-private,” not like actual cash and greenback payments that the U.S. authorities backs as its “fiat” forex.
In different phrases, you possibly can’t pay your taxes in Bitcoins. You possibly can’t use Bitcoins for a lot of issues for that matter. Most corporations do not settle for them, and those who do are largely on-line corporations akin to Expedia and Overstock.
What, precisely, is a Bitcoin? It’s a 256-bit string of encrypted information saved on a pc (which actually means it is a bunch of ones and zeros).
This Bitcoin information will get utilized in an open-source software program known as “blockchain,” which acts as a decentralized and largely nameless digital ledger in alt-currency transactions. Its nameless creator preprogrammed the system to create 21 million Bitcoins.
Why 21 million? As a result of, hey, why not?
There are at the moment about 17 million Bitcoins in circulation. The remainder are being, ahem, “mined” by individuals utilizing the free software program and computer systems to brute pressure trillions of quantity combos to unlock new Bitcoins. If this all sounds a bit outlandish, it is as a result of it’s.
The one factor that offers Bitcoin tokens any worth is that individuals are utilizing precise cash to purchase them. Therefore the 2017 bubble. As a result of there isn’t any cryptocurrency central banking system (which is a part of its attract), there isn’t any dependable approach to worth a Bitcoin. Cryptocurrency is backed by precisely $zero.00 in property. Thus, its worth will depend on no matter somebody is prepared pay for it.
That’s the reason Bitcoins are primarily bought by speculators for resale, moderately than used like forex in a transaction.
However wait – there’s extra. When you get a Bitcoin, you want a “pockets” – an encrypted on-line checking account – by which to carry it. However as a result of these banks should not “actual” (not in an FDIC sense) there isn’t any approach to get your Bitcoins again in case your pockets is hacked and your information is stolen. Similar factor in case your laptop system crashes and erases all of your Bitcoin information.
I suppose that is a threat one should take when making nameless and untraceable monetary transactions.
The libertarian in me truly likes the thought of decentralized and unregulated cash that governments and huge establishments cannot management. And I am OK with the notion Uncle Sam does not need to get his grasping fingers on each single greenback that comes my approach. However that does not imply I will begin investing in Bitcoins or its rivals, akin to Ethereum or Ripple. Sorry, however I choose my cash rooted in actuality.
And a way of actuality is what appears to be missing amongst these within the crytocurrency herd. Contemplate this: the market worth of the complete crypto trade supposedly might high $1 trillion this yr. That is 3 times greater than ExxonMobil, an actual firm with actual, income-producing property. That is twice as large as Microsoft and roughly the identical measurement as Apple.
None of this appears rational to me. It looks like I am ingesting a Zima in 1999 whereas watching a Pets.com industrial and studying about how AOL bought TimeWarner.
Cryptocurrency, in and of itself, isn’t an asset. It does not produce something and its worth relies solely on the thought it may be bought to another person for more cash sooner or later, very similar to a Ponzi scheme.
Sure, the Bitcoin bubble made tens of millions for some individuals. However its additionally created a whole lot of losers, just like different irrational and extremely speculative gambles all through historical past. Have we already forgotten the Beanie Infants bubble and dot-com increase?
Whereas billionaires like Warren Buffett and funding gurus akin to Vanguard’s Jack Bogle will not contact cryptocurrencies with a 10-foot pole, there aren’t any scarcity of close to cultish crypto crusaders and blockchain backers who will dismiss critics as stodgy geezers who “simply do not get it.”
Put me within the geezer camp.
I am prepared to concede blockchain would possibly sometime be capable to do to monetary transactions what Amazon did to e-commerce or what Fb did to social media. However I am not about to place a dime of actual cash right into a extremely speculative and intangible asset that might disappear with a couple of keystrokes.
Cryptocurrency is one get together I am completely satisfied to skip as a result of I believe the morning-after hangover goes to be a doozy.
Attain Damon Cline at (706) 823-3352 or firstname.lastname@example.org.