35 crypto companies got together to make a change dot org petition called âBitcoin Deserves an Emojiâ.
F that
IMO, you shouldnât be investing in cryptocurrencies or any currencies for that matter. Currencies should be
used, not hoarded with the expectation of gain. If youâre buying cryptocurrencies as an investment, youâve already lost.
Cryptocurrencies literally cannot function without speculative investment. Even in the absence of formal investors, *someone* has to be the first person to accept the tokens in exchange for something of value, in hopes that they will have value of their own in the future. Until then, the tokens are unusable.
Further, the market cap and liquidity of a cryptocurrency impose practical limits on what it can be used for. You canât very well conduct a billion dollar transaction through a cryptocurrency that has a market cap in the millions. Investment raises the market cap, âunlockingâ these higher-value use cases. Conversely, loss of investor confidence will reduce the market cap, and effectively reduce the utility of the coin.
This is why ability to scale is so important. The current market values of Bitcoin and the various alts are based far more on speculative investment than they are on usage. Those investors believe that the coins will see far more usage (and have far more natural demand) in the future than they do today. If that turns out not to be the case due to an inability to scale, investors will start to flee, and the vicious cycle will start.
I donât think anyone needs to exchange cryptocurrencies for âsomething of valueâ for the investment to work, they just have to believe the currency itself holds value, where value is defined by supply vs demand. If enough people think others will believe it has value, then demand will increase. Itâs basically how MLMs work, but it can sustain itself once it reaches a sufficient number of investors.
Adding transactions for real goods and services in the mix expands the reach of the currency and can stabilize demand a bit once the initial speculators have lost interest. So yeah, thereâs absolutely a motivation for speculators to try to get others on-board. But itâs not necessarily a requirement, as we can see with other collector fads like Beanie Babies or Baseball Cards (the only value is in trading with other collectors), but just changed to be digital (NFTs are the strongest analogue).
However, just because speculators are rewarded if you use a cryptocurrency for transactions doesnât mean you should avoid it. Use it if it provides value to you. The value proposition is:
- lower transaction fees, especially for international transactions - Bitcoin fails for small local transactions, but works well for large and international transactions; the lightning network helps for small transactions, and other currencies exist for small transactions as well
- privacy - banks can and do sell your data, and governments may be interested in your transactions as well; you canât use cash for online transactions, so there arenât many good options
- security - breaches and scams happen, and if you donât notice the issue soon enough, you could end up paying for fraudulent transactions; with cryptocurrencies, you never share your private key, so youâre as safe as wherever you store that key; you can also move money between keys, so you can keep the bulk of your money safe
Even without any kind of physical backing, cryptocurrencies offer an attractive value proposition. We could probably solve the above with fiat, but that currently is not a thing. I donât recommend using cryptocurrencies for everything, nor do I recommend using it as an investment, but I do recommend using it for a few transactions here and there until you feel comfortable with it because of that value proposition.
It seems like youâre arguing against a position that I donât hold? Iâve been invested in Bitcoin for a long time, and Iâm quite familiar with its technical and socioeconomic dynamics. Iâm skeptical of altcoins specifically, not of cryptocurrency as a concept.
Maybe? It reads like youâre arguing that you shouldnât buy cryptocurrencies at all if you donât understand how transactions are handled. I donât think thatâs true, and that will just discourage the normal, everyday person from getting started. You may need that info if youâre interested in investment/trading, but you donât really need to get into the weeds if you just want to pay for some online services.
The important thing for lay-people is to recognize the value cryptocurrencies can provide, understand which cryptocurrencies are âstableâ (as in, not some altcoin scam), and understand transaction times and costs. Thatâs honestly it. If we can achieve that, more people will start using cryptocurrencies for transactions where itâs available, more vendors will see it as a viable payment source, liquidity will improve, and developers will address the issues as they come up.
If youâre buying something other than the top few cryptocurrencies, then yes, I agree with you. But youâre not going to do that if your goal is to use it as a currency, because no real vendors are going to accept whatever that new altcoin is. If you stick with the big coins and your goal is to spend those coins, youâre not likely to get screwed. Bitcoin can work w/ Lightning, and Monero (my preference) is great on its own. Those are also the two that are most commonly accepted by vendors.
Maybe we agree there, idk. I think your comments read a little gatekeepy and from a âcryptocurrencies are investmentsâ standpoint, and I think the focus should be âcryptocurrencies are currencies.â
