The Blockchain is Important and so is Bitcoin

At the moment, it seems to be fashionable for venture capitalists and tech journalists to say “I love the blockchain, just not bitcoin.” There are a few things that people that make this claim completely ignore:

The blockchain does not work without bitcoin

The blockchain is a distributed public ledger that allows individuals who don’t know and trust each other to transfer value. Miners in the Bitcoin network secure the distributed ledger and verify transactions. Miners expend electricity to verify transactions, and they are incentivized to do so by earning a bitcoin reward and transaction fees for their work. Miners participate because bitcoin has value. Without a digital token that has value, there is no secure distributed public ledger that anyone can use to transfer value quickly and cheaply across the world.

Bitcoin is an economic experiment

Traditional fiat currencies today are based on Keynesian economics, which suggests that the optimal economic policy can be achieved through economic intervention by the government. This approach to money has not worked out well for people in many countries across the world like Argentina, Zimbabwe, and Cyprus. There are many reasons to believe that a digital currency based on math rather than trust in people could be an improvement to traditional fiat currencies. This hasn’t been proven before though, so people tend to dismiss bitcoin as a currency.

Bitcoin has the best characteristics of money

Money is a language people use to express value. Throughout history, people have always chosen to use the best form to express value based on six characteristics: scarcity, durability, divisibility, fungability, portability, and recognizability. If you evaluate bitcoin on all six characteristics, you will learn that bitcoin is superior to any fiat currency or commodity that has ever existed.

To say that bitcoin has the best characteristics of money is not to say that bitcoin is money yet. In the traditional economic sense, money is defined as any item or verifiable record that serves as a medium of exchange, store of value, and unit of account. While bitcoin is currently functioning well as a medium of exchange, the world is still determining whether it wants bitcoin to be its store of value and unit of account. That decision will play out over a long period of time and is solely dependent on adoption. As bitcoin becomes easier to use and more useful for people around the world, it has a chance to fulfill its promise of being the the world’s first liquid, global language to communicate value.

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