Will bitcoin go the way of MySpace and become the original source for a new and improved technology? The website paved the way for social networks everywhere before being triumphed by Facebook and Twitter. In the near future, will bitcoin meet its demise just to be succeeded by a more improved cryptocurrency?
That could very well happen, says James Rickards, investor and author of the best-selling book “Currency Wars,” who spoke with Kitco News (via Forbes) on Thursday arguing that it’s very important to distinguish bitcoin from the technology. He explained that the future of bitcoin’s technology doesn’t necessarily have to rest on the digital currency itself.
In order to prove his point, he likened the development of bitcoin to human evolution: Neanderthals perished, but human DNA survived.
“I think what is going to happen is that you will find that the currency dies out but the technology may survive,” he said. “What it really is, it’s heavily encrypted, open-sourced, inexpensive computer code for transferring title to anything, not just currencies units but stocks, bonds, land titles.”
Although it has been stated that individuals are investing in bitcoin because of its return on investment potential, Rickards says people and companies are pouring money into the digital currency because they believe in the technology’s future. Despite his level of optimism, he doesn’t recommend people to buy the virtual currency because it hasn’t been tested through an entire business cycle.
“Bitcoin came out 2009 and since then we have been in an economic expansion – a weak expansion but (the economy) has been expanding – and we’ve never had a downturn,” he said. “So we don’t know how Bitcoin will do during a bear phase of the business cycle.”
The theory behind Rickards’s assertion has been iterated before. The tools behind bitcoin are still in their infancy stage and more development needs to take place in order to cement its legacy as an innovative technology. Of course the author of “Currency Wars” doesn’t appear to make any reference at all of bitcoin being competition to the United States dollar, euro or yuan.
Similar to MySpace, bitcoin has achieved unprecedented success in such a short timeframe: generated worldwide buzz in a brief period, garnered millions of followers, saved consumers money, allowed merchants to adopt a new payment system and much more.
It remains to be seen if bitcoin needs something more to survive in today’s economy and marketplace. Does it need an apparatus with heightened security? Will the market call for a cryptocurrency to be backed by gold and silver? Should bitcoin identify itself as a payment system or an alternative currency? Could it remain deflationary or does it need to change into a inflationary system?
All these questions will be answered by the marketplace within due time. Whether or not bitcoin survives the next 10 years is irrelevant, the quintessential question is: will the technology advance forward to a new stage or will it stay the same?
