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Archive for the ‘bitcoin adoption’ tag

Nov 1, 2018

Will we all be using a blockchain currency some day?

Posted by in categories: bitcoin, cryptocurrencies, economics, government

At Quora.com, I respond to quetions on Bitcoin and Cryptocurrency. Today, a reader asked “Will we all be using a blockchain-based currency some day?”.

This is an easy question to answer, but not for usual Geeky reasons: A capped supply, redundant bookkeeping, privacy & liberty or blind passion. No, these are all tangential reasons. But first, let’s be clear about the answer:

Yes, Virginia. We are all destined to move,
eventually, to a blockchain based currency.

I am confident of this because of one enormous benefit that trumps all other considerations. Also, because of flawed arguments behind perceived negatives.

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Jun 21, 2018

What will it take for Bitcoin to be widely adopted?

Posted by in categories: bitcoin, cryptocurrencies, economics, finance

Early adopters, speculators and Geeks are never sufficient to bring a new paradigm to market. Mass appeal and adoption of a mechanism that requires education and a change of behavior is never ‘fait accompli’—until it reaches a tipping point. Once at the tipping point, it can go viral without a structured PR campaign and with risks tied only to technology and scalability.

What about early adopters? Can they drive mass adoption?

Somewhat, but not much beyond market awareness. Generally, early adopters drive mass adoption only for evolutionary inventions. For example:

  • The automobile was an evolutionary change to transportation. Although it changed our behavior (maintenance procedures and frequency / distance of travel), it did not require an educational seminar to ride in a car. You either had access to a horse or a car.
  • Likewise, the audio CD and DVD improved media acquisition and enjoyment. But books and seminars were not needed to understand these inventions. Their purpose and use was very similar to the preceding technology: audio tape, records and video recorders.

But some inventions are different. Their use requires that users become acquainted with a technology or process that they didn’t realize they needed! [continue below image]…

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Dec 16, 2017

Is Bitcoin a Store of Value?

Posted by in categories: bitcoin, cryptocurrencies, economics, finance, government

Bitcoin has many characteristics of a currency. It is portable, fungible, divisible, resistant to forgery, and it clearly has value. Today, that value came close to $20,000 per coin. Whether it has ‘intrinsic value’ is somewhat of a moot question, because the US dollar hasn’t exhibited this trait since 1972. Today, economists don’t even recognize the intrinsic value of gold—beyond a robust, international, supply-demand network.

Lately, Bitcoin is failing as a viable currency, at least for everyday consumer transactions. The settlement of each transaction is bogged down with long delays and a very high cost. The situation has become critical because of squabbling between miners, users and developers over how to offer speed transactions or lower the cost of settlement. Bitcoin forks and altcoins such as Dash and Bitcoin Cash demonstrate that these technical issues have solutions. Since Bitcoin is adaptable, I believe that these issues are temporary.

But an interesting question is not whether Bitcoin will eventually become a consumer currency. it is whether Bitcoin can distinguish itself as a store of value, rather than just an instrument for payment or debt settlement. After all, a Visa credit card, a traveler’s check and an Amazon gift card can all be used in retail payments, but none of them have value unless backed by someone or something. US Dollars on the other hand are perceived as inherently valuable. They carry the clout and gravitas of institutions and populations, without users questioning from where value arises. (This is changing, but bear with me)…

What about Bitcoin? Does owning some bitcoin represent a store of value? Yes: It absolutely does!

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Oct 22, 2017

What can we learn from small fraction of people who own 1 BTC

Posted by in categories: bitcoin, cryptocurrencies, economics, geopolitics, internet

How many individuals own at least 1 BTC?

I was asked this question today at Quora, a popular Q&A blog covering a variety of technical and economic disciplines. Under my alias “Ellery”, I am the most viewed author on Bitcoin and the blockchain.

While this question may sound like a good factoid for a trivia game, it is directly related to something with with far reaching impact on your pocketbook and your future. It goes to the heart of a debate between warring factions: In the 2nd half of this answer, I address the eternal question:

Is Bitcoin a pyramid scheme? Or are we still early on the adoption curve?

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Mar 3, 2017

What Fraction of Bitcoin Value is Driven by Speculators?

Posted by in categories: bitcoin, cryptocurrencies, economics, internet

At Quora, I occasionally play, “Ask the expert”. Several hundred of my Quora answers are linked here. Today, I was asked “How much of Bitcoin’s value is driven by speculation”. This is my answer…


This is a great question! While the value of any commodity is determined by supply and demand, speculation is one component of demand. Another is the unique utility value inherent in a product or process. This is sometimes called ‘intrinsic value’.

It’s ironic that when a high fraction of value is driven by speculation, short-term value becomes volatile and long-term value becomes less certain—and less likely to produce returns for those same speculators.

Editor’s Note: In the past few weeks, a significant spike in Bitcoin’s value and trading volume relates to a pending regulatory decision expected at the end of next week. This activity is certainly driven by speculation. But for this article, I am considering periods in which the demands of individual events are less clear.

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Jun 11, 2015

Bitcoin Adoption: Series of reactions

Posted by in categories: bitcoin, cryptocurrencies, economics, finance, government

What is Bitcoin?

Bitcoin-05-t-sSure—You know the history. As it spread from the geeky crypto community, Bitcoin sparked investor frenzy. Its “value” was driven by the confidence of early adopters that they hitched a ride on an early train, rather than commercial adoption. But, just like those zealous investors, you realize that it may ultimately reduce the costs of online commerce, if and when if it becomes widely accepted.

But what is Bitcoin, really? To what class of instruments does it belong?

• Ardent detractors see a sham: A pyramid scheme with no durable value; a house of cards waiting to tumble. This is the position of J.D, an IRS auditor who consults to The Cryptocurrency Standards Association. As devil’s advocate, he keeps us grounded.

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