Twitter user Beautyon and widely-followed crypto blogger on Hackernoon has published a blog post in which he has argued that it would be “absurd” to think of Bitcoin (BTC) as money. While pointing out that digital assets represent an “unprecedented paradigm shift,” the crypto enthusiast believes we don’t understand this new technology “in the same way” that “pioneer providers of email” did not realize the full potential of the new form of communication.
Comparing Email To Bitcoin
Going on to mention that Microsoft’s Hotmail service began using technologies that are still around today (in more advanced forms) such as web browsers and email-related protocols, Beautyon notes that many applications have become obsolete. For instance, he wrote that Outlook Express, an email client, has now been “superseded” by more sophisticated and lightweight web-based interfaces.
The latest email applications using various cloud-based computing services offer “many advantages over a dedicated client with [users’] mail in [their] own local storage,” Beautyon explains. He adds that Bitcoin has the potential to “transform the way [we] transfer money.” However, Beautyon clarifies:
Thinking about Bitcoin as money is as absurd as thinking about email as another form of sending letters by post; one not only replaces the other but it profoundly changes the way people send and consume messages. It is not a simple substitution or one dimensional improvement of an existing idea or service.
In addition to being able to function as money, Bitcoin is a lot more than that. As Beautyon notes, Bitcoin is a robust protocol and its true value cannot be determined based solely on how frequently its traded on exchanges or how well it’s performing in comparison to traditional financial market assets, the blogger argues.
Here’s What Really Happens During A Bitcoin Transaction
He also states:
You would not set up an email exchange to discover the value of email services, and the same thing applies to Bitcoin.
He further notes that when we open our mailbox, compose an email, and press send, “it goes through your ISP, over the internets, into the ISP of your recipient(s) and then it is outputted on your recipient’s machine.”
Going to compare a Bitcoin transaction to sending an email, the blogger says that when we send Bitcoin, we are actually ”inputting money on one end through a service and then [we are also] sending the Bitcoin to … recipient(s), without an intermediary to handle the transfer.”
Elaborating further on the technical process, the blogger writes, “once Bitcoin does its job of moving your value across the globe to its recipient it needs to be ‘read out’.” This means Bitcoin must be, at this point, “turned back into money, in the same way that your letter is displayed to its recipient in an email.”
Bitcoin Has Intrinsic Value
As explained, it’s illogical and incorrect to think of Bitcoin as money - which is a gross oversimplification of what the cryptocurrency actually is. However, Bitcoin can only be effective “as long as the value of Bitcoins does not go to zero.”
Since we are transferring value in a decentralized manner, Bitcoin must have a non-zero value so that “it will have the [some] utility,” Beautyon states. Although he makes interesting and valid points, Beautyon also claims in his blog post that Bitcoin has “no intrinsic value.” But this may not necessarily be true, because the pseudonymous cryptocurrency is mined, or created, using an energy intensive proof-of-work (PoW)-based mining algorithm.
If any asset in modern history has intrinsic value, it would have to be Bitcoin because it takes “real work” to produce, verify, and settle transactions.