Vitalik Buterin hit the nail on the head recently when he twittered the following: “all crypto communities, ethereal included, should heed these words of warning. Need to differentiate between getting hundreds of billions of dollars of digital paper wealth sloshing around and actually achieving something meaningful for society”.
Not sure what people got from the statement. Many are still lost in the idea that crypto currency was created for the speculative/investment market. During December we saw Bitcoin drop 6,000 USD in “value” over 12 Christmas days. Some will see this as a perfect opportunity to get into the “crypto-market” by buying low with the intention of holding and then, selling high later. And, this is absolutely gambling.
What’s amusing are websites like Coindesk who show index tables and charting that allows users the ability to look for technical details in the charts with some notion that the user can work out where Bitcoin is heading. I can tell you, Bitcoin is going either up or down; place your bets please.
How about we take heed of Vitalik Buterin and support a real utility Coin that is entirely useful in terms of its ability to be acceptable in the market and understood by all. For sure we need a coin that has some fundamental backing — not sand or sugar, or trees or bananas, and certainly not USD (worthless paper); No, we need something far more universally acceptable. We need a crypto backed by Gold.
Now, if we are going to talk about a Real Utility Coin we MUST discuss the transaction costs. After running a brief experiment I can for sure say Bitcoin can never be a Real Utility Coin: Ijust used $50 USD value of Ether and ran it through Shapeshift to get Bitcoin. My $50 US dollars in Ether is now worth $20 in Bitcoin. What happened?
Well, Gas happened! For every transaction using Bitcoin costs right now a minimum of $21 USD (don’t take my word for it, go and check online). So, 21 for Bitcoin, around 2 for Ether and the rest for shapeshift. Now my remaining $20 is locked into Bitcoin and I will have to spend money just to release it. And, it will cost $21 to release it. Yes, I may as well forget it. I shall HOLD my Bitcoin as it is not worth the cost of using it. And, Ether is going down the same path too. In the early days it was a lot cheaper than now. As the Ether goes up in value so do the transactional costs — the gas. Does this sound like a good way to generate a Utility Coin? No way. It sounds like a good way to get rich: create a super fast highway and charge all the cars to use it. Do you hear all that Digital Paper Wealth Sloshing around? Maybe, but i also hear Ether gas accumulating into the Billions of USD.
Before we all start accusing each other of self-serving selfishness. We should really think hard about what a Real Utility Coin should look like, and how the coin should move about. Comments?