Why So Many People Believe Bitcoin is a Scam
It was my senior year of high school and one of our teachers called us in a room full of new computers. We were instructed to sit down and “surf the web.”
“Surf the web?” What did that even mean? At the time I did not live anywhere close to the beach and couldn’t really understand this concept of web surfing. It was clunky and pages were slow to load. There was no way that this was going to be useful. I went back to the library later that day during study hall and read the newspaper. You know, the ones you see in hotel lobbies and occasionally outside of restaurants.
All kidding aside, when people are used to doing something a certain way for so long it truly becomes part of who they are. I have operations management experience and every time I attempted to change the process or way of doing something to make it more efficient I was typically met with resistance.
Some people are far more married to certain ideologies that others. We see it everywhere. I see it with the older generation at church not liking the newer music. Or, for example, the National League baseball purists despising the idea of the designated hitter. How about even simple things like when Facebook or Twitter changes the user interface? Don’t mess with my timeline! LOL.
Why then should it be any different for Bitcoin or any cryptocurrency? I talk to people every day who are educated and successful and yet still can’t wrap their heads around cryptocurrency. To me it is like explaining how to surf the web to people in 1994.
For centuries people have had it ingrained in their brains that money issued by the government meant it had value.
Fiat currency (money issued by a government – USD, Euro, Ruble, etc) has this connotation behind it that because the government printed this it MUST be of value. While it is true that our dollars have value, most people think it is because it is backed by something. As a society we have decided that shiny minerals we dig up from the ground are “valuable” and therefore so is our money.
When economies are humming along and governments aren’t overbearing and people have a relative “trust” in them then yes, fiat currency works quite well. What happens when we tip that scale and things don’t go so well? Economists have varying opinions on that, but most of the time governing bodies will step in and try to stimulate the economy. This is done by manipulating the economy via tactics such as lowering interest rates or quantitative easing. Governments love to turn on the printing press when things go bad.
These types of scenarios can lead to distrust, or far worse. Recessions can turn into even bigger problems such as price controls or food shortages. Just ask the people of Venezuela who are protesting in the streets on a daily basis. This is because their government backed Bolivar now has seen triple digit inflation and it’s not even worth the paper it’s printed on. Let that sink in.
The distrust of centralized banks, governments and corporations has led to people seeking financial refuge elsewhere. It can be incredibly difficult and costly to move move around the world as well. I used to manage banks and the process was tedious and required many eyeballs on it for verification purposes.
Blockchain technology is changing all that. It is completely decentralized meaning that no one President, Dictator, government or corporation can control it. The online digital accounting ledger known as the blockchain maintains trust and multiple persons nearly instantly verifying transactions for each other. People are financially incentivised to do so. It’s a genius peer to peer operation that relies on people’s greed to verify each transaction. Because of this, blockchain transactions are also the safest and most secure transactions ever invented.
What the internet did for information, blockchain technology is doing for transactions. Bitcoin is not backed by any shiny material in the ground, but by something far greater. The lack of trust in traditional fiat currency is causing people from all over the world to move their money into cryptocurrencies. It is a secure and relatively easy method of payment. I can send Bitcoin to anyone in the world for almost no fee at all and they receive it instantaneously. They can keep it in Bitcoin or they can instantly trade it on an exchange back into the local currency of their choice.
Not only that, but merchants around the world are starting to take notice and many are now accepting Bitcoin as a method of payment themselves. If I owned a store, I would be BEGGING people to pay me in Bitcoin. Those who accepted Bitcoin since the start of 2017 have now TRIPLED their profit.
And it is only getting started. Right now only about 1% of the population is confident in conducting regular transactions with Bitcoin. Imagine when that number moves to 3%. Then to 10%.
What many people don’t realize is that the more people that jump into cryptocurrency the more value it will have. This is because the amount of Bitcoin that will ever be created is FINITE. And you can’t have a Ponzi scheme with a finite resource. That number happens to be 21,000,000. That’s it. Once that happens there will never be another Bitcoin created again. I have written articles on learncryptoinvesting.com discussing the details behind this if you want to learn more.
Because we have 7 billion people on the planet and probably only 15 million people invested in cryptocurrency, there will come a day that 1 Bitcoin alone will be more than enough to retire on.
Now you can certainly continue singing those same songs. In fact, I like the occasional hymn now and again, but with more guitar. You can continue to fight something you don’t fully understand or dismiss it as a fad while Fortune 500 companies and governments are starting to realize it’s not.
Let me close with this. Eventually we all put down that newspaper in study hall and began to catch up on the news and other interests we have by surfing this web. You can’t argue that or you wouldn’t be reading this article!
Thank you for reading this and, as always, I would love to hear from you.
