What Terra,s collapse Teaches about Crypto and Bitcoin
The term, “crypto” is essentially the definition of money and technology that has become so integral to society. It can mean different things — it can be a word you hear thrown around the room with no apparent meaning (“crypto”) or one that means something completely different depending on your circumstance.
Today I want to focus on crypto.
It all started as an experiment in the mid-2010s when a guy named Paul Schulman created Bitcoin. By then, only 21 million people (or less than 2% of the global population at the time) had heard about Bitcoin. One of them happened to run Bitcoin Meetup in his basement for five years. At this point, Bitcoin was still mostly a niche. There were many other coins out there but none that could really be considered mainstream.
That was until BTC.IO came along. For $4 at the start, BTC.IO instantly became part of everyone’s vocabulary and the blockchain tech community exploded all over Europe. People used Bitcoin not just to send money online but also to store cryptocurrency or even more interesting things like paper records, identity information and much more.
However, that wasn’t enough to make bitcoin popular. In 2014, two guys called Satoshi wrote their own Bitcoin white paper. Satoshi Nakamoto was a computer engineer by profession but he wasn’t a pure hacker, he was also very intelligent. His idea was to create the first decentralized application system, which would allow anyone with access to the internet to add applications to the system without having to install proprietary software.
He proposed Bitcoin, or Bitcoin as we know it today, to be the most secure form of digital currency since it allowed people to transact without touching real property. This was a huge leap forward for the world of finance.
The next year after publication, someone else published another whitepaper. But, unlike Satoshi, they weren’t trying to rewrite the paper itself because it did say a whole lot and didn’t have any major flaws in it. Instead, they wanted Bitcoin to be extremely easy to use.
They suggested making it so simple that nobody even needed to know how to code at all, making it extremely easy to accept payments via cards instead of cash and much easier to trade. Since Satoshi wasn’t perfect they thought Bitcoin would be.
The rest of 2013 was dedicated to developing new Bitcoin features and fixing problems. As the price rose, it seemed like it had reached its peak. So what was wrong? Well maybe it wasn’t the network effect, it was the competition from ETH.
A few months later on, in early 2016, ETH would finally go mainstream and break down the dominance of Bitcoin. Not long before Ethereum started being able to compete with Bitcoin, Coinbase put up Bitcoin for sale. Soon after, Ripple and Litecoin followed suit and within a month or so, all three altcoins had been overtaken by Bitcoin.
But here’s the deal. None of these currencies is actually cryptocurrencies that we think to be worth anything. All three are unique to their individual owners. Their coins hold value, meaning they don’t exist in a single wallet (which is what they have done before). If you want to keep some, you need to pay money, otherwise, they vanish. These tokens belong to each owner and in fact, the coin is owned by the owner. No outside force can claim ownership of those tokens.
The problem with these coins is that they can be quite worthless. An unsold token may be worth zero, while a fully sold ICO can fetch 10x. Even if you are successful in buying a good product — in our case an electric car — the company taking the funding will have to prove its ability (through various methods of verification) to deliver on the promises. Most people think that Bitcoin is like the proverbial black dog in the movie Gone with the Wind, but it’s actually quite more complicated than that.
Here’s What You Need To Know About Blockchain, Coins And More
Anyone can send a private message to whoever wants to buy Bitcoin. After it gets listed on exchanges all companies take a bite and see what happens. Usually, nothing much happens and then we wait again for the next round of funding. Now that BTC is gone, so do these funds. Or, at least, most of them. Why give money to projects you have little faith in? In the end, there is always going to be a bad actor looking to seize control and get rich quick.
Yes, there is a regulation that prevents that but the government can’t control everything. You can’t force someone to sell their entire stake in X without paying a certain amount.
At the same time though, a company has every right to decide which company gets funding. To be fair, it isn’t difficult if you know how to play the game well and have a strong business model. However, the industry is moving fast and with great speed and the potential for abuse comes a growing list of scams as well as fraudsters.
So how can you avoid getting into trouble and losing your hard-earned money?
Is it possible not to invest in a project because you think it could eventually disappear into thin air and nobody will notice? How can you tell which projects will work and which ones won’t?
Do you know what happens when you spend too much money on a shoddy project? Could it suddenly pull the rug out from under you and turn your dream into ashes before your eyes? Unfortunately, we won’t know that for sure until the end of 2023. Until we see what kind of change we can expect to expect a decade and a half ago. Only time will tell.
Originally published at https://digitalcrypto.top on May 14, 2022.
