Recent opinion pieces have drawn parallels between bitcoin and tulips because of the speculative frenzy surrounding the latter in the 1600s. I explain why those comparisons are unfair and why analyzing bitcoin solely as a store of value misses the point entirely.
Why Bitcoin Isn't a Digital Tulip — and Why It Will Never Be
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Bitcoin Is Not a Digital Tulip, Even if the NGU Thesis Has Stalled Temporarily
Reviewing major publications for my daily dose of bitcoin news, today I found an article that established similarities between the digital tulip fever that took these flowers to absurd prices during the 1600s, analyzing bitcoin purely from an investment and store of value perspective.
And surely, if you look at it from a “suitcoiner” perspective, bitcoin has dropped the ball this year, fumbling during October and November, two months that have been traditionally positive for the cryptocurrency.
Nonetheless, any analysis that considers bitcoin just as “digital gold,” taking its value directly from its properties as a store of value, is incomplete and misses the point that gave birth to the prime cryptocurrency in the first place.
Like money, besides its “store of value” function, bitcoin has other properties, including the often-overlooked medium of exchange aspect, which was pivotal in its inception. In its whitepaper, published in 2008, Bitcoin is referred to as “a system for electronic transactions without relying on trust,” something that maintains its revolutionary aspect even now.
Before Bitcoin, all value had to be transferred using intermediaries, and all money had to be sanctioned by central banks, with few exceptions. Bitcoin’s innovation does not only reside in its scarcity, which is related to its proposal as a substitute for fiat currencies, but also in the technology that allows this value to move independently from a central authority.
Understandably so, this is not as valuable for a first-worlder who enjoys the benefits of a functional banking system and can pay and get paid using a myriad of services. But, for people living under sanctions and being rejected by traditional providers, bitcoin and its technology are a blessing.
And this is why, even if number-go-up gets slower, bitcoin will never be a digital tulip, because of its inherent functionality.
