12-year-old programmer Benyamin Ahmed shares his thoughts on Bitcoin — "Bitcoin will not only succeed, but I would argue that it has already succeeded."
Ladies and Gentlemen, today I will outline my reasons why I believe and why you should believe that Bitcoin will succeed.
Bitcoin is a new form of currency that only exists in digital form. It does not exist as a physical currency like sterling, dollars and rupees. As it only exists as a digital entity, it is not backed and supported by any central bank or government. It is a fully decentralized network outside the control of any government or traditional financial authority. Instead, it is authenticated and validated by a peer to peer network using cryptography and a shared ledger to record transactions, known as the blockchain.
I will now briefly outline four reasons why Bitcoin is considered controversial, then correct each of these mistaken beliefs:
Bitcoin and other forms of decentralized cryptocurrencies allow people to trade without going through a middleman such as a bank. Banks charge fees for transactions. Governments set legislations such as controlling interest rates, charging taxes and managing inflation. Peer-to-peer networks threaten to dismantle this powerful system of governance and control.
In February 2011, a website known as Silk Road was created. The Silk Road marketplace could be used to buy and sell a whole host of questionable and illicit goods including drugs like MDMA, commonly known as ecstasy, high grade crystal meth, as well marijuana butter chocolate chip cookies. This was only possible due to cryptocurrencies operating outside the banking sector. The Silk Road went on to become the fastest growing marketplace ever, out-performing even Ebay! All transactions were carried out in Bitcoin. In February 2013, the FBI had no choice but to shut down Silk Road and sentence its founder to life in prison.
At the start of this year in January, a single Bitcoin was valued at around $16,000 dollars. Today, a single Bitcoin is valued at around $65,000 dollars. A highly fluctuating currency such as Bitcoin makes it a poor candidate to be used as a currency for pricing goods and services.
Environmental Damage From Mining Bitcoin
Powerful computing hardware must be deployed in order to solve the cryptographic puzzles involved with mining Bitcoin. According to the latest studies, Bitcoin mining accounts for about 0.2% of all global energy consumption and generates as much carbon dioxide as cities like Las Vegas and Vienna. Will Bitcoin survive Greta Thunberg’s climate revolution?
I will now address the four mistaken beliefs that the cynics make concerning governments, frauds and scams, price volatility and environmental damage.
Following initial fears from governments, central bankers, many financial institutions have now started to embrace Bitcoin and wider cryptocurrency developments.
Recent developments have included:
On Sept. 7, 2021, El Salvador became the first country to make Bitcoin legal tender. The government gifted $30 in Bitcoin to all citizens in order to promote the use of crypto wallets. Panama is considering following El Salvador and many other countries have now allowed the trading and investment in cryptocurrencies.
In the traditional financial world, Wall Street welcomed the first Bitcoin futures ETF in October 2021. With considerable interest from banks like JPMorgan, The ProShares ETF became the fastest ETF to get to $1B in assets!
The massive and unstoppable ground up adoption of Bitcoin is forcing all governments to accommodate this new paradigm.
Those who say that Bitcoin facilitates frauds and scams only have to look at other innovations that have been misappropriated for malice. Innovations in chemistry lead to life-changing drugs, but also chemical weapons! Developments in industry have created the modern world, but have also fueled the armaments industry.
The internet itself has allowed cyber-crime and fraud to flourish; however, nobody in their right mind would suggest that we legislate against these innovations.
The price of Bitcoin has indeed been volatile, creating multi-millionaires overnight, who have speculated on these bits and bytes. The price of Bitcoin will eventually stabilize especially when more goods and services are pegged to it similar to sterling and dollars.
Bitcoin’s power-hungry reputation cannot be ignored. Alarmist predictions need to be offset against the energy saving potentials of this new technology. As the financial news publisher Bloomberg reported, “No, Bitcoin Won’t Boil the Oceans.”
Printing traditional money is not an energy free process. Coins that depend on the mining of zinc have a serious impact on the environment. Many countries have now started to pull the production of low denomination coins. For example, Canada ditched its lowest value coin as the cost of producing it was greater than its overall value. Energy consumption for other digital services, like sending emails and watching Netflix, is prone to the same energy arguments against mining Bitcoin. Bitcoin must not be held up as a unique offender.
As you can see, the four main arguments against Bitcoin: governments, frauds and scams, price volatility and environmental damage can easily be discounted.
Bitcoin offers greater transparency. Its ledger is a public document that can be downloaded by anyone with a computer. Could we download all transactions for Barclays Bank or HSBC with such ease?
Bitcoin offers better security. Its peer-to-peer ledger, known as the blockchain, cannot be tampered with as it is distributed across millions of computers around the globe.
Bitcoin and the blockchain offer greater speed and efficiency. Traditional slow processors, such as purchasing homes, can be streamlined.
Bitcoin and the blockchain help to reduce costs. Businesses and consumers can benefit by removing unnecessary third-parties and middlemen.
Blockchain is creating powerful applications not only in finance but also in healthcare, education and a whole host of other industries. These transformative applications are driven by the innovations introduced by Bitcoin.
Bitcoin will not only succeed, but I would argue that it has already succeeded.