If you subscribe to my newsletter, Crypto is Easy, you know my investment thesis on bitcoin: it works even if the financial system doesn’t and its price goes up over time. Few assets do both, and none of them can match bitcoin on cost, accessibility, or liquidity. Therefore, everybody should have some.
For eleven years, bitcoin has proven it works and its price goes up over time. Even after this recent drop below $6,000, those statements remain true.
Nobody knows whether this recent drop will invalidate that thesis. We’ll have to see what happens over the next few days. By the time you read this, we may have a totally different situation.
I offered a little perspective in this video message to subscribers on March 12, 2020:
While everybody’s focused on bitcoin’s price, I would rather focus on something far more significant.
Bitcoin offers a service and benefit beyond its investment value. It’s the same value all cryptocurrencies have: you can transfer ownership of “things” to anybody, anywhere, anytime, instantly, in any amount, for any purpose, with certainty everything will work the way you expect.
No database or government can do that.
I hope people will realize this on their own, after some research, honest discussion, and maybe open-minded debate. It’s one reason I wrote Consensusland—to encourage conversation about cryptocurrency among everybody, not just the moonboys or the technologically curious.
With everything going on in traditional financial markets, I worry that it will take a global disaster to show people why cryptocurrency is an important, valuable technology. If we have the meltdown everybody worries about, we may see the first really viable, widespread adoption of cryptocurrency for something other than speculation or hedging a portfolio.
That won’t happen because cryptocurrency proves it’s better than the current system, but rather, because the current system no longer functions.
Bankers can get sick. Bitcoin can’t. Banks can run out of money. Bitcoin can’t.
As long as banks and financial service providers can clear and settle transactions in a way that merchants and businesses can accept, we will continue the natural, organic evolution of cryptocurrency as an alternative financial technology.
If they fail in that task, we will see disruption in the function and flow of finance. Even without widespread damage to the system itself, that will create an opening for every cryptocurrency to demonstrate that it can do one thing that the banking system can’t:
Work all the time.
Let’s hope we never have to find out whether my fears are justified.
We have so many people fighting to save the world from disease and financial ruin. Nurses, researchers, medical supply manufacturers, shipping companies, central bankers, diplomats, military servicepeople, financial professionals, and many others.
It’s a tough fight.
Let’s hope they succeed. That way, cryptocurrency will continue to develop naturally, organically, over time. Our financial system will continue to function. Bitcoin’s network will continue to grow and innovate. Its price will recover. New technologies will do what they’ve always done: try, fail, and eventually, triumph.
These consequences will matter far more than any drop in bitcoin’s price.
Mark Helfman is editor of Crypto is Easy and a top writer on Medium for bitcoin and investing topics. His book, Consensusland, explores the social, cultural, and business challenges of a fictional country that runs on cryptocurrency. In a past life, he worked for U.S. House Speaker Nancy Pelosi.