Image credit: source

Everyone knows digital cash is valuable. But who could have guessed digital gold could be too?

Bitcoin ushered in 2018 by morosely sinking to its all time market dominance lows of less than 33%. It took about half a year for it to turn back up to more than 50%, and since then it’s consistently hung around in the 50% to 55% range.

Now it’s topped 55% for the first time since September 2018, and it’s done so with a vengeance, charging up to 58%.

Picture not described: chart-1.jpeg Image: Getty

According to LiveCoinWatch, Bitcoin is up around 20% against fiat in the last 30 days, while ETH is down 4.5% in the same period. Things are even glummer for other top twenty contestants. To look at a semi-random smattering of them, XRP is showing a 15% loss, IOTA a 17% loss, newish entrant ATOM a 22% fall and Stellar a truly outstanding 28% loss.

Binance Coin is a fun exception, because even after a 7 day loss of 21% following the Binance hack, it’s still up almost 5% over the last 30 days.

But let’s not compare apples with oranges. Let’s instead compare apples with artificially apple-flavoured products.

Among the pure currency-style coins, Bitcoin Cash is putting on a brave face with about a 5% loss over the last 30 days. But DASH is feeling a 13% drop, Litecoin is aching at a 16% fall and BSV is close to losing 30% of its value in as many days.

Note that this will likely change by the time you read this.

So what does it all mean, if you insist on it meaning anything?

Also watch

{“data”:[{“id”:”QBcEBxEQmzQ”,”title”:”Looking at Power Ledger (POWR)? Adoption, value and 2019 roadmap explained by Dr Jemma Green”,”publishedAt”:”2019-05-08T03:02:25.000Z”,”thumb”:””},{“id”:”924Z4Fwd5N0″,”title”:”Deleted video”,”publishedAt”:”2019-05-08T00:31:45.000Z”,”thumb”:null},{“id”:”HxgbAkH1PJY”,”title”:”Binance Coin (BNB) Analysis & Deep Dive u2013 Binance Chain, DEX and 2019 Roadmap”,”publishedAt”:”2019-04-30T06:10:13.000Z”,”thumb”:””},{“id”:”8_SoIXUBIhw”,”title”:”Who created Bitcoin? Craig Wright reveals alleged contributors for the first time | Full Interview”,”publishedAt”:”2019-04-27T11:16:04.000Z”,”thumb”:””},{“id”:”c8RjLf0S0q0″,”title”:”Who is Satoshi? Alleged Bitcoin creator Phil Wilson tells all in interview”,”publishedAt”:”2019-04-17T18:35:15.000Z”,”thumb”:””}],”layout”:{“direction”:”vertical”,”theme”:”light”,”splitTitle”:true,”showArrows”:true},”active”:{“index”:0,”start”:0,”end”:null,”thumb”:null,”thumbAnimation”:null,”smallTitle”:null,”mainTitle”:null},”playerOptions”:{“autoplay”:false,”captions”:false,”mute”:false,”popup”:true},”subscribe”:{“url”:” “,”title”:”SUBSCRIBE”,”visibleOnPopup”:true,”visibleOnMain”:true}}

Opinion: The value of a Bitcoin

What’s clearly happening here is people shifting out of alts to chase the Bitcoin rise, engineering a self-fulfilling prophecy as they do. This is interesting, because Bitcoin’s actual value proposition is under heavier attack now than it has been in a long time.

Following the Binance hack there were some quickly-quashed discussions of a blockchain reorganisation to recover the funds. The community for the most part didn’t take it well, and Bitcoin actually had to contend with the spectre of its own mutability for the first time in quite a while.

Basically, Bitcoin has two core value propositions – two reasons why it’s valuable. One is that it’s immutable, and the other is that it’s scarce and contains value simply because it’s valued.

But the fact that Bitcoin isn’t technically immutable has been an open secret for years. The pool of Bitcoin miners is small and they all know each other. If the mood collectively took them, engineering a blockchain reorg would be extremely easy.

So what, some people argue. The miners are dedicated to Bitcoin’s immutability, and in most cases are genuinely committed to making sure no one can tamper with the chain. They are both ideologically and financially motivated to protect the blockchain so there’s nothing to worry about. And this is undeniably true. Only the most extenuating circumstances could make the miners agree to reorganise the blockchain. For all intents and purposes, even a crypto behemoth like Binance couldn’t single-handedly engineer a reorg just because it wanted to.

But others argue that this still puts Bitcoin back to square one, relying on social norms and blind trust to secure the blockchain, and that to pretend otherwise is willful ignorance. Even if miners won’t reorg, the fact that they can is still problematic.

Picture not described: bitcoin-value-proposition-emin-gun-sirer-tweet-snip.jpg Image: Getty

But the markets clearly aren’t fussed. So if cryptocurrency prices are based inherent value of the products being traded (they aren’t, but let’s just stick with one inconvenient truth at a time), it clearly means Bitcoin’s value is not dependent on it being genuinely immutable.

Rather, the price tag must be attached to some other element. It may reflect trust in the motivations of the miners that secure Bitcoin, or belief in its functionality.

Digital gold

Let’s circle back to the other cash-style cryptocurrencies that are falling even as Bitcoin is rising.

For the most part their innate value proposition is very similar to Bitcoin, in that they offer a dubious degree of blockchain immutability and contain value simple because they are valued. But they also aim to offer a degree of utility that Bitcoin doesn’t, in the form of faster and cheaper transactions.

Functionally they are faster and cheaper than Bitcoin, while otherwise having identical value propositions. And yet, they’re obviously lacking that special something which makes Bitcoin as valuable as it is.

That special something has been described by a lot of people as “meme value.”

As Ethereum developer Danny Ryan once observed, “The meme value of Bitcoin is very high. People definitely bought into the meme… the store-of-value meme, the king-of-crypto meme, the first-and-thus-better meme.. the gold thing.”

A safe bet

Bitcoin now offers more than $100 billion of je nais sais quoi.

It might not sound flattering, but for the sake of perspective it’s worth noting that this isn’t unique to Bitcoin.

Rhino horns are not an aphrodisiac, but they’re still incredibly expensive. Gold has been in a bubble for thousands of years, natural diamonds are functionally inferior but monetarily superior to artificial diamonds, the world’s most expensive food is flavour-neutral bird phlegm, alternative medicines with no proven use are growing in popularity and far too many luxury goods are just plain ugly.

A bet on Bitcoin is a bet on the irrational value attached to collectibility and brand recognition. Historically that’s always been an incredibly safe bet.

It’s nice that Bitcoin (BTC) audaciously took the digital gold rather than the digital cash route, because it’s really hammered home the point of how irrational the concepts of value can be. Everyone knows digital cash is valuable, but far fewer people would have guessed that digital gold could be too.

Disclosure: The author holds BTC, BNB, ATOM at the time of writing.

This information should not be interpreted as an endorsement of cryptocurrency or any specific provider,
service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and
involve significant risks – they are highly volatile and sensitive to secondary activity. Performance
is unpredictable and past performance is no guarantee of future performance. Consider your own
circumstances, and obtain your own advice, before relying on this information. You should also verify
the nature of any product or service (including its legal status and relevant regulatory requirements)
and consult the relevant Regulators’ websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.

Latest cryptocurrency news

Picture: Shutterstock

(Excerpt) Read more Here | 2019-05-10 04:44:19


Please enter your comment!
Please enter your name here