Bitcoin Global News (BGN)
January 14, 2019 -- ADVFN Crypto NewsWire -- Some would think that it would be reasonable to say that Bitcoin has been one of the most volatile assets ever over the course of its’ history. At the same time, the numbers do not lie. Despite the media panning last year’s bear market as one of the worst ever, Bitcoin’s 12-month volatility appears to sit at about 5%.
Despite this however, yesterday CoinDesk published an article that appears to conclude that Bitcoin’s true value will reveal itself to be zero over time. The writer, Kevin Dowd, who teaches economics and finance at Durham University, bases this idea on two foundational assumptions.
First, he has concluded that the mining industry that Bitcoin has created is a natural monopoly. If you are not familiar with this term, then it could help instead, to say that the mining industry is a space with such high start-up costs that it is nearly impossible for most interested players to join.
In one sense, this is true. The rise of ASICS and similar specialized computers has caused the original vision of Bitcoin being a network for all to become distorted. In truth, mining is currently a practice of the rich and technically gifted. At the same time, networks like Stellar are reportedly enabling the shift of crypto mining back to the everyman, through mobile mining. Still, mobile mining has not taken enough of a hold to consistently reach industry headlines yet.
Dowd’s second point is that the cryptocurrency has no clear regulatory framework, which means that having a sound product becomes even more important and those which are lacking technically will fail more quickly than in regulated industries.
In the end, here is where his argument falls short. There is no proof that Bitcoin is an inferior product, simply due to the fact that thousands of projects have sprung forth from it, including Ethereum. It is, in effect, an industry maker.
With this in mind, when faced with Dowd’s central question of it Bitcoin is destined to fail, we can then confidently answer: “there is no evidence to support this at this point.” Finally, a better question for the future might be: will Bitcoin always be the industry’s top asset?
By: BGN Editorial Staff