“The numbers don’t lie” is a common way of defending a position. This has never been truer than in response to the argument over the past months that Bitcoin is dead.
Pundits, financial advisors, and cryptophobes globally have welcomed the crypto winter of 2018, which saw BTCmove from highs near $20,000 to current levels around $3,500. The argument, they say, is that like the tulip bubble of the 16th century, Bitcoin has collapsed.
Some have even gone so far as to suggest that Bitcoin is in the midst of a ‘death spiral’ – a prolonged loss in value that will eventually result in the final collapse and closure of the platform.
Shortsighted
Such a view, while perhaps understandable with the massive losses of the past year, is nevertheless shortsighted. The analysis, though weak, is not the biggest issue with this position. Instead, it is a fundamental misunderstanding about the nature of Bitcoin. Many in the legacy financial markets understand Bitcoin like any other asset in the marketplace, as a simple store of value or commodity, but without a tangible backing. This leads them to believe that the value of Bitcoin could actually reach zero. However, unlike other assets or commodities, Bitcoin is also a functionally viable currency based on consensus. This means that the value of Bitcoin is tied up both in its asset value and its transactional value, making it a unique financial instrument. Therefore, transactions represent real value in the marketplace. This is where the numbers of Bitcoin in 2018 tell a very different story than its opponents are claiming.Over $3.2 trillion was sent using bitcoin in 2018 https://t.co/EJrCzF0OkC
— Dennis Parker (@Xentagz) January 20, 2019
Transactions = Stability = Life
With transactions totaling $3.2 trillion in 2018, Bitcoin’s volume is minuscule compared to fiat foreign exchange transactions, which total over $5.3 trillion daily. However, the issue is not comparative volume, but usage. So long as the platform is being used, and used consistently, the value of the market should continue to be maintained. This number is similar to the numbers from 2017. Some would say that this is actually a sign of stagnation, but by comparing the price decline with the stability of transaction volume it is clear that the total number of transactions increased in 2018. The simple conclusion from those numbers is that Bitcoin is not dead. In fact, quite the contrary — Bitcoin is showing signs of stability in the market, regardless of the price loss. While a variety of opinions may exist, the numbers just do not lie.
Do you think Bitcoin is in a death spiral that could eventually collapse the network? Are the transaction volumes a sign of growing stability? Let us know your thoughts in the comments below!
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Jon Buck
With a background in science and writing, Jon's cryptophile days started in 2011 when he first heard about Bitcoin. Since then he's been learning, investing, and writing about cryptocurrencies and blockchain technology for some of the biggest publications and ICOs in the industry. After a brief stint in India, he and his family live in southern CA.
With a background in science and writing, Jon's cryptophile days started in 2011 when he first heard about Bitcoin. Since then he's been learning, investing, and writing about cryptocurrencies and blockchain technology for some of the biggest publications and ICOs in the industry. After a brief stint in India, he and his family live in southern CA.
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