More than 10 Million bitcoin (BTC) could be bought for the current price of one bitcoin ($7,300), a decade ago. Since its first ever recorded price, bitcoin’s growth over the next ten years has been remarkable. With a market cap of more than $130 billion, bitcoin has shown 720,000,000% price surge since its inception. Whereas Gold witnessed a mere 64 times increase in price over a century, with $19.95/oz in 1919.
In this short span of time, bitcoin has managed to acquire a status that, previously, wasn’t easily achieved by gold. The decentralized digital currency has experienced speedy progress in the four stages of evolution of money. In contrast, fiat and gold took a long period of time to advance through the stages.
Collectible, store of value, medium of exchange and unit of account, are the four stages that need to be qualified by entities before they can be declared equivalent to money. The journey of stages has evolved many assets of today’s world. As per Stanely Jevons, a well-known economist, gold had gone through the same path to end up as a measure of value. He explained;
Historically speaking … gold seems to have served, firstly, as a commodity valuable for ornamental purposes; secondly, as stored wealth; thirdly, as a medium of exchange; and, lastly, as a measure of value.
A collectible is an item that has a worth far more than it used to have due to its demand or rarety. Shells, beads and gold, all were once a collectible before they attained a different form of money. On the other hand, the store of value is an asset that doesn’t undergo depreciation and maintains its value. A collectible transforms its status when it is sufficiently demanded by people. With an increase in demand, a good starts exhibiting traits of a suitable store of value and experiences a rise in its purchasing power. Items such as gold and other metals make a good store of value but perishable items such as milk incapable of following criterion to be a store of value.
Anything representing a standard of value, items used to express or measure the value of other items, and perceived as an acceptable mode of payment to both, buyer and seller, during a trade qualifies to be a medium of exchange. In this stage, the value of the good stabilizes. Unit of account is an important function of money. Any asset used as a monetary unit to other economic entity such as assets, liabilities, etc is accounted as a unit of account. This stage proceeds medium of exchange stage because only after an asset is widely used as a store of value, it can be used to price other goods.
READ ALSO: Bitcoin Will be Tradable Over $7 Trillion Fidelity Investments
Bitcoin started out as a collectible in 2009 and later an exchange was set up to where bitcoin could be traded for U.S dollars. This shows that bitcoin along with its uncontrollable decentralized nature leapfrogged the evolutionary stages whereas gold took thousands of year to surpass the collectible and medium of exchange stages before gold coins were regarded as a unit of account.
Besides price, the performance and growth of bitcoin have been outperforming in many other aspects as well. Today, there is a mass of people, organizations and governments who are keen on adopting bitcoin. Now, buying and selling of bitcoin are made very convenient by several exchanges whereas, in the beginning, only a handful of small scale exchanges operated and allowed people to trade bitcoin. Moreover, the digital currency has disrupted the world with its digital and decentralized characteristics.
READ ALSO: $41.5 Million Bitcoin Hack: What We’ve Learned So Far
Many financial institutions such as banks are directly threatened by bitcoin as it allows users to easily transfer payments over the internet. What sets bitcoin singular is the extremely low transaction fee in addition to the absence of central authority. In this way, bitcoin making peer-to-peer funds transfer completely decentralized is processing thousands of transactions of billions of dollars worth. In the past, even the head of IMF, Christine Lagarde, accepted the disruption brought by bitcoin as she stated:
I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system.
READ MORE: After Undermining Bitcoin, IMF and World Bank Launch Their Own ‘Crypto’
Although the progress of bitcoin is compared with that of gold’s, there are many counter-narratives suggesting bitcoin’s incompetence to match the likes of gold and money, fiat. Bitcoin due to its extreme volatility is not able to remain stable which is a prerequisite for items regarded as a medium of exchange. Furthermore, people also argue that bitcoin is not used to translate the value of other things in its own term which means that it doesn’t qualify of being a unit of account. Like if a coffee shop accepts bitcoin payments, in reality, it’s not the true bitcoin price. Instead, it is U.S dollar price translated into bitcoin terms.
This shows that bitcoin despite marking steady progress in several phases has a long way to go before it can be accepted as payment option irrespective to the bitcoin exchange rate against fiat currencies. Previously, Dr. Michael Yuan, Co-Founder of The CyberMiles Foundation, confirmed the same sentiment while talking to BlockPublisher. He stated:
TBD. Neither Bitcoin or any other cryptocurrency (ex. Ripple) is currently used as an everyday currency because they’re treated as a store of value” vs. a true utility token to pay for everyday goods and services.
While bitcoin is on the rise, in the future, it would be of interest to see how bitcoin continues its journey to become a unit of account
Inner Mongolia to Shutter ‘Illegal’ Bitcoin Miners by October as China Cracks Down on Industry
China’s Inner Mongolia autonomous region is carrying out an inspection to eliminate “illegal” bitcoin mining operations by October, a government spokesman told CoinDesk, confirming a local report.
The official document detailing the inspection plan was leaked to Chinese media which published photos of the decree from the Inner Mongolian regional authority.
“The inspection is directed by the central government, rather than a standalone plan initiated by the local government,” according to an industry executive involved in the planning process.
“The move reflects the nationwide phase-out plan on the bitcoin mining,” the source added. The government’s plan is to drive out the digital currency mining industry from China by 2021..
According to the 10-page document, data centers that provide facilities for bitcoin miners and unregistered bitcoin mining businesses will be closed.
The local authorities leading the raids will target any bitcoin mining operation that tries to get preferential electricity prices and tax breaks by pretending to be a sanctioned user, such as a big data company or cloud computing host.
Existing bitcoin mining businesses that pass the inspection will be categorized as “limited companies” that should pay the official electricity rate and not negotiate with power stations directly. They will still be expected to shut down their mining operating by 2021.
The region-wide inspection is being rolled out in two phases.
The municipalities are carrying out the inspections from Sept. 3 to Sept. 25 and then.reporting their findings to the regional government, which will form a team to investigate the findings from each jurisdiction from Oct. 10 to Oct. 20..
Inner Mongolia, in northern China, is among the most suitable areas to operate bitcoin mining businesses thanks to its cheap electricity supply, low land prices, cold weather and a small population.
Such conditions help miners by reducing their biggest cost – electricity – cooling equipment more quickly and avoiding densely populated areas that would be bothered by noisy operating machines. Bitmain, one of the largest bitcoin mining companies, has had operations in the region.
China started to crackdown on bitcoin mining operations before the formal announcement in April by the National Development and Reform Commission, the primary government agency for economic planning.
The NDRC’s position indicated that the mining industry should be phased out of China as it does not fit in the future economic development plan of the country. Trading and possessing cryptocurrencies is illegal in China as part of broader currency controls, but crypto use is prevalent on the black market.n-miners-by-october-as-china-phases-out-indust
JP MORGAN IN METALS RACKETEERING SOUP; BITCOIN STILL A FRAUD?
WHO IS THE FRAUD NOW?
JP Morgan Chase boss Jamie Dimon once called bitcoin a fraud. Two years ago he said ‘If you’re stupid enough to buy it, you’ll pay the price for it one day.’ Now it turns out that his bank has been the fraudulent one as the DOJ flexes its muscles against JP Morgan’s trading desk.
According to the Financial Times, three metal traders for the Wall Street bank have been charged for market manipulation in what the prosecutors described as a
“Massive, multiyear scheme to manipulate the market for precious metals futures contracts and defraud market participants.”
JP Morgan’s head of precious metals trading, Michael Nowak, was charged on Monday along with two colleagues, Gregg Smith, and Christopher Jordan. The federal racketeering charges handed out are normally used to take down organized crime syndicates.
Effectively JP Morgan can be considered a crime syndicate following this scandal and RT anchor Max Keiser tends to agree.
“Yep. We called every dirty, Silver manipulation of @jpmorgan
#FinancialTerrorist, human tapeworm Jamie Dimon made $1 bn on this.”
The indictment alleges that between May 2008 and August 2016, the defendants engaged in widespread spoofing, market manipulation and fraud for gold, silver, platinum and palladium futures contracts while working on the precious metals desk at the bank.
JP Morgan along with HSBC dominates global flows of gold and silver trading. The charges added that the traders placed orders that they intended to cancel before execution in order to create liquidity and drive prices toward orders they wanted to execute on the opposite side of the market.
SHORT THE BANKERS, LONG BITCOIN
It has been a long time coming but it is likely the case will increase scrutiny over the world’s precious metals markets and the dominance of large banks such as JP Morgan. Prosecutors indicated that more senior executives and other banks were under investigation.
In the past decade alone global banks have been fined more than the entire market capitalization for all crypto assets for a range of nefarious activities. Just last week banks in the UK were hit with billions of dollars in fines for an insurance scam that defrauded millions of citizens.
For once we can say with confidence, yes, bitcoin solves this.
Should Jamie Dimon take back his ‘bitcoin is fraud’ statement? Let us know what you think.
BITCOIN AND BLOCKCHAIN BOOSTING LAW INTENDED TO CREATE JOBS
BLOCKCHAIN TO GET THE JOBS ACT RIGHT
The Jumpstart Our Business Startups Act, colloquially known as the JOBS Act, is a law intended to create jobs in the United States. The concept behind it is to encourage funding of small businesses by easing various securities regulations.
President Barack Obama signed JOBS into law in April 2012. Before the enactment this law, authorities allowed companies to raise money only from accredited investors holding a net worth of at least $1 million.
Then, under the JOBS Act, new rules and proposed amendments were designed to assist smaller companies with capital formation, providing investors with additional protections.
Thus, on October 30, 2015, the U.S. Stock Exchange Commission (SEC) adopted the rules to allow companies to offer and sell securities through crowdfunding. Specifically, Title III of the JOBS Act provided a federal exemption under the securities laws so that investor can use crowdfunding to trade securities.
However, according to Forbes, the law failed to materialize the number of jobs expected, forcing former vice-chairman of NASDAQ David Weild IV, one of the main supporters of the law, to call “for a JOBS Act 2.0 that would be built using blockchain, a shared distributed ledger.”
Now the law it seems is starting to fulfill its promise. For example, on August 19, 2019, INX Ltd. filed with the SEC the initial public offering (IPO) petition to raise $130 million by selling security tokens. The minimum investment amount to participate in the IPO is $1,000. Moreover, Forbes reports,
“Weild, who sits on the board of INX, says he now has 14 blockchain and cryptocurrency clients waiting in the rafters to bring the best of blockchain to the best of traditional exchanges, and perhaps, finally get the JOBS Act right.”
BITCOIN ADDS JOBS TO THE DIGITAL ECONOMY
Bitcoin is also streaming jobs into the economy directly. Job sites such as Monster.com, Simplyhired.com, and Indeed.com continuously post a variety of jobs related to BTC.
Additionally, sites specialized in freelance job opportunities often post jobs that pay in BTC. Cointastical published a long list of freelancing platforms that offer payments in Bitcoin.
So, thanks to Bitcoin’s technology and the Internet of Things (IoT), the digital economy continues to provide us with more jobs and opportunities.