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Why Most Educated People Don’t Understand Bitcoin

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Misir Mahmudov, a widely-followed and respected bitcoin (BTC) analyst, has argued that “most educated people fail to appreciate bitcoin because they only specialize in one field.” In order to truly understand how bitcoin works, Mahmudov, a financial economics student at Columbia University, recommends having some grasp of basic computer science and economics concepts.

He has also suggested learning more about cryptography, game theory, central banking, psychology, and distributed systems. Having some idea about these fields, Mahmudov notes, should help people in truly appreciating bitcoin and what it aims to offer. While pursuing their undergraduate studies, most people usually choose one or two main areas of focus such as economics, business studies, or a more technical discipline such as computer or mechanical engineering.

Those who are more interested in gaining a deeper understanding of how the human mind works, or how nation states are formed, might decide to major in social sciences such as psychology, sociology, and international politics. However, it is difficult, if not impossible, to become a master of all these subjects. But that may not be necessary in order to understand why Bitcoin is one of the most important inventions in modern history. 

First proposed in a whitepaper published in November 2008 by its pseudonymous creator, Satoshi Nakamoto, the Bitcoin protocol specifies how an electronic peer-to-peer (P2P) cash system should work. For the first time, modern cryptographic techniques were applied to create what’s now a multi-billion dollar experiment in monetary theory. 

Understanding The Importance Of Purchasing Power And Deflationary Assets

Unlike fiat currencies, which are inflationary as central banks can print an unlimited amount of paper money, there can never exist more than 21 million bitcoins. Being able to understand the implications of this when it comes to purchasing power requires some research into the various problems related to the fiat-based currency system. In countries like Zimbabwe and Venezuela, the national currency has become practically worthless because it’s being created and controlled by a poorly managed centralized bank. Mismanagement of a nation’s money system by a single entity has led to hyperinflation in several areas of the world, which has made the cost of acquiring basic goods and services practically unattainable for the millions of citizens in these developing countries. 

Acquiring The Background Necessary To Understand Arguments About Bitcoin

While prominent economists such as NYU professor, Dr. Nouriel Roubini, have argued that cryptocurrencies will not be successful in the long-term, there are other well-known economists such as Dr. Saifedean Ammous who firmly believe that Bitcoin’s decentralized value transfer system is a superior form of money. Although we may not agree with all the viewpoints expressed by Roubini or Ammous, our ability to interpret and analyze their arguments about decentralized cryptocurrencies would improve if we were more familiar with economic theories.

With Bitcoin being the first deflationary asset that has been adopted at a relatively large scale, the concept of scarcity and how it relates to an asset’s ability to become a long-term store-of-value (SoV) is perhaps best understood and articulated by former Google engineer, Vijay Boyapati. According to Boyapati, who’s known for his convincing arguments about why the world’s most dominant cryptocurrency will become a great SoV, Bitcoin has “never been useful as a medium-of-exchange (MoE) because the opportunity cost of using it as such is huge. The only people who can stomach that cost are people for whom the transaction cost of not using Bitcoin is even bigger than the opportunity cost (i.e., illicit market trades).”

Understanding Bitcoin At The Psychological Level

Although Boyapati appears to have a professional and academic background only in mathematics and computer science (as detailed in his LinkedIn profile), he has been able understand how and why Bitcoin could evolve into a legitimate currency and a globally recognized asset. As he has explained using many different examples and scenarios, Bitcoin would have to work effectively as a unit of account, MoE, and a SoV in order to become a currency that is widely accepted by merchants worldwide. 

In addition to involving concepts from economics and technical disciplines such as computer science, Bitcoin has to be understood at the psychological level. Before a currency or asset becomes widely accepted, people need to feel comfortable using it. The more confident people are about something, the more receptive they will be towards (at least) trying it, in order to determine whether it will suit them or work for them. 

In places where the country’s citizens have lost trust in the national currency and financial system due to corruption, it will become increasingly difficult for the same centralized institutions to regain the same level of trust they once took for granted. Because decentralized currencies like Bitcoin are designed to minimize trust, as they don’t require intermediaries to settle transactions, it can be challenging at first to become comfortable with this idea. 

Becoming Comfortable Conducting Transactions Without Intermediaries

Becoming familiar with how Bitcoin transactions are transparently recorded on block explorers can give people the confidence they need to start using blockchain-based currencies. Put simply, a blockchain is a type of data structure that allows multiple parties to engage in transactions without requiring a trusted intermediary. In most cases, a counterparty is also not needed when conducting cryptocurrency transactions. 

When the average person is first introduced to these crypto-related concepts, it can be challenging to fully understand how a monetary system like this could actually work. After carefully reviewing how a blockchain is designed to function, it becomes easier to start grasping how a decentralized digital currency such as Bitcoin can be reliably used to pay for goods and services. 

In the coming years, cryptocurrency-related technology is expected to improve and a larger percentage of the world’s population will likely begin using the internet to learn and engage in business activities. Many believe that Bitcoin and other decentralized coins and tokens may just become a widely-accepted part of Web 3.0, which is a term used to refer to new and evolving set of protocols that will be used to power the internet in the future.

The post Why Most Educated People Don’t Understand Bitcoin appeared first on Crypto Core Media.

Source: https://cryptocoremedia.com/why-most-educated-people-dont-understand-bitcoin/

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Bitcoin Price Could Triple Even After a Modest Switch From Gold, JP Morgan Says

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Despite having a complicated past, it seems that JP Morgan’s love for Bitcoin is growing every day thanks to its potential as an investment and store of value.

In a recent report, the American bank shared with its investors an analysis of Bitcoin’s current situation and possible future scenarios regarding prices and fundamental value. The bank explained that under the current conditions, Bitcoin has a good chance of increasing its price.

JP Morgan Believes Bitcoin Could be an Alternative to Gold

JP Morgan believes that investors could switch from gold to bitcoin as a way to diversify their portfolio and having another uncorrelated storage of value. This is especially important for those who don’t want to depend exclusively on gold when it comes to diversify their risk exposure:

“Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price.

The report also adds that adoption is key to increasing Bitcoin’s perceived utility, and therefore, its price. They explain that it is necessary to observe a more significant number of “economic agents” accepting cryptocurrencies as a means of payment in order to talk about a historical price appreciation scenario.

This is not far from reality. In fact, bitcoin is increasing acceptance by large economic agents (which seems to prove JP Morgan’s thesis). The recent rise in prices from $10,500 to the current $13,110 began after the payment processor Square announced a $50 million investment in Bitcoin.

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PayPal’s announcement to support the purchase and sale of cryptocurrency -BTC, ETH, BCH, and LTC for now- also further catalyzed the crypto markets’ bullish sentiment.

A Generational Thing

JP Morgan also assures that Bitcoin’s acceptance within the global financial culture goes through a cultural or generational context. As boomers leave the market and millennials take a more prominent position, Bitcoin and other digital tokens become more relevant in the investment world.

“The potential long-term upside for bitcoin is considerable as it competes more intensely with gold as an ‘alternative’ currency we believe, given that Millenials would become over time a more important component of investors’ universe.”

However, this assertion must be taken with a pinch of salt since studies reveal that Gen Z -the Millenials’ offspring- are not as enthusiastic about the use of crypto, opting for alternatives involving the digitalization of fiat money.

Jp Morgan believes Bitcoin could be largely adopted, but GenZers think otherwise
Gen Zers are not really into Bitcoin. Image: Business Insider

JP Morgan’s statements show the bank’s ability to adapt to new market trends, which is also characteristic of PayPal. Just two years ago, the bank’s CEO said Bitcoin was “worse than tulip bulbs” while PayPal’s CEO referred to Bitcoin in the same way:

“Bitcoin is the greatest scam in history. It’s a colossal pump-and-dump scheme, the likes of which the world has never seen.

Bitcoin is having a good time, with many models anticipating potential upward behavior over the next few months. The most controversial and discussed one, the stock-to-flow model, predicts that Bitcoin could reach $1 million by around 2026.

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Source: https://cryptopotato.com/bitcoin-could-double-triple-price-gold-market-jp-morgan/

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Bitcoin Just Marked New 2020 High, But This Indicator Signals Correction Incoming (BTC Price Analysis)

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Starting by looking at the bigger picture, Bitcoin price had made a remarkable run since October began, gaining almost $3000 to its value.

Looking at the following long-term weekly chart, we can see this week’s greenish candle that will be closed later today. From a technical point of view, as long as the candle close price is above the $12,500 area (previous high) – we can safely say that BTC is on a healthy uptrend.

btc_oct25_w-min
BTC/USD weekly. Chart by TradingView

The Good and The Bad: New 2020 High but Bearish Divergence

Just a few hours ago, Bitcoin price recorded a new 2020 high close to $13,400 (on Binance Futures); however, the primary cryptocurrency could not hold there, and quickly slumped to $12,700 in a matter of one hour.

Looking at the shorter-term chart, the 4-hour, we can identify a bearish divergence on the RSI. This is a bearish pattern and might indicate that the buying power is fading away.

This happens when the price goes through a higher-high, but the RSI indicator is doing the opposite and going through a lower-high.

Another worrying sign is the trading volume. Since its peak volume on October 20-21, four days ago, the trading volume decreased even though the BTC price had actually gone up.

BTC Support and Resistance Levels To Watch

As mentioned above, if BTC were to correct, then the first major level of support lies at the current levels around $12.9 – $13K. If Bitcoin breaks here, then the first significant level lies at $12,700, followed by the previous 2020 high from August at $12,400 – $12,500.

From the bullish side, if Bitcoin holds the $13,000 – then the first levels of resistance lie at $13,200, followed by today’s high around $13,400. Bitcoin will be looking to break the 2019 high from June – at around $13,880.

Total Market Cap: $400 billion

Bitcoin Market Cap: $240 billion

BTC Dominance Index: 60%

*Data by CoinGecko

BTC/USD BitStamp 4-Hour Chart

btc_oct25_4h-min

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.


Source: https://cryptopotato.com/bitcoin-just-marked-new-2020-high-but-this-indicator-signals-correction-incoming-btc-price-analysis/

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Bitcoin Breaks New 2020 High As Total Market Cap Topped $400 Billion (Market Watch)

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Bitcoin continues with the 2020 records and just a few hours ago marked a fresh high of above $13,350. Most alternative coins followed suit with impressive increases, but the market has calmed since then. The entire cryptocurrency market clocked at above $400 billion.

Bitcoin To Yet Another 2020 High

CryptoPotato reported a few days ago that the primary cryptocurrency exceeded the August 2020 high of about $12,500 and reached $13,200. What followed was a slight retracement to about $13,000 and stagnation yesterday.

Nevertheless, the volatility returned in the past 24 hours, and BTC headed towards new highs. This time, Bitcoin broke above $13,350. In fact, according to data from Bitstamp, BTC’s new 2020 high is at $13,362.

Another sharp rejection followed, and the asset tanked briefly below $13,000. Nevertheless, the bulls have since driven it above the coveted mark, and BTC trades at about $12,940.

A compelling chart recently revealed that Bitcoin is forming an inverse head and shoulders pattern. If it’s to play out, the cryptocurrency could soon skyrocket even further and top its all-time high of $20,000.

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If this scenario is indeed to materialize, Bitcoin would have to break above the resistance lines at $13,420, $13,500, $13,815, and $14,000 before reaching new records.

btcusd_chart
BTC/USD. Source: TradingView

Altcoins Follow Up And Calm Down

Most alternative coins experienced similarly increased volatility as Bitcoin. Ethereum surged to a new 7-week high of nearly $420. However, ETH quickly retraced and is now hovering around $409 again.

Ripple’s highest level came at about $0,26, but XRP has since decreased to below $0.253.

Thus, on a 24-hour scale, most larger-cap altcoins have remained essentially at the same positions as yesterday, despite the brief price jumps. Chainlink and Litecoin have registered the most gains of about 3.6%. LINK trades close to $12.35, and LTC is positioned at $56.3.

heatmap
Cryptocurrency Market Heatmap. Source: Quantify Crypto

The most impressive gainer since yesterday is Filecoin. After the recent controversy and continuous price slump, FIL has surged by 45% in the past 24 hours.

Ocean Protocol (18%), Quant (17.5%), THETA (10.2%), Reserve Rights (10.2%), and Ampleforth (10%) have also increased by double-digit percentages.

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.


Source: https://cryptopotato.com/bitcoin-breaks-new-2020-high-as-total-market-cap-tops-400-billion-market-watch/

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