Q. What do Internet memes and fiat currency have in common?
A. The printing presses never stop.
As the internet continually prints new memes, so too governments print new money.
But let’s take a look back at the first internet meme, “The Eternal September”. Back in the 80s early 90s the internet was in its infancy, much like Bitcoin today, the web hadn’t yet taken off and the ever growing online community hung out on Usenet bulletin boards.
Each year around September, the regular users would notice an influx of new “less knowledgeable” users. They hadn’t yet learnt the basics, and they’d make the same mistakes new users often make on forums today (e.g. start a new topic without first searching to see if one exists, asking questions that have already been answered, etc). As always this would wind up the old timers a little, but they quickly noticed this rapid influx of new users would die down after September, for these new users were recent college freshmen who were tasting the internet for the first time.
Fast forward to late October 1993 and Usenet users witnessed something they’d never experienced before, The rapid influx of new users kept on coming, this number should have started to slow down, November passed, so did December, yet the influx of new users kept coming, it was like the tide had turned inwards, but this time it wasn’t going back out.
This event became known as the “Eternal September” or “The September that never ended”. But what was the cause?
AOL, one of the largest online companies in the world had decided that perhaps Usenet wasn’t so scary after all, it was a place everyone was going to end up anyway, so why keep trying to hold back the tide?
AOL opened the gates right at the time that the internet was exploding, internet users went from one hundred thousand to one million in two years, the next year this population increased to 10 million, this growth today hasn’t stopped, although Usenet is no longer the popular go to place, The internet itself has tens of millions of new users that go online for the first time each year.
So what does this have to do with Bitcoin?
2017 is the beginning of Bitcoin’s Eternal September, the September that never ends. Every long term bitcoiner has noticed a huge influx this year, the space has literally doubled within a year. Not all long term users were happy at first, with the influx of new users so too has come an influx of the same questions over and over again, but worst of all we see more and more scams than ever before, the most notable of these is the ICO craze.
It’s not all bad news, Bitcoin is of limited supply but is infinitely divisible, one bitcoin is made up of one hundred million smaller units. So effectively a Bitcoin can be shared between tens of millions of people. This limited supply has led to a major price increase. What’s more amazing, is that the massive influx of users this year is only the arrival of the early adopters. You see with the previous years of Bitcoin, the community members would be best described as the lunatic fringe.
Bitcoin adoption today is where the internet was in 94/95 or where Facebook was in 2005. When you compare the user count of the internet in 94 or Facebook in 2005 to their user count today, the number seems miniscule. However, comparing the growth of those years to the years leading up till then, you see that, as a percentage, the growth was explosive, but still only a fraction of what was to come.
The interesting thing about Facebook’s rise is just how rapid its growth really was, it outpaced the growth of the internet. The two main interactions humans do each day are gossip and commerce. Facebook easily allowed users all around the world to interact relatively freely with little censorship, Bitcoin now allows any user on the web to transact freely with any other user, this is something that most people have not yet started to understand.
Many of the early bitcoin adopters, the “lunatic fringe”, had predicted that every human will one day carry an international bank around in their pocket, as all a user needs is a phone and a cryptocurrency app. Five years ago this sounded beyond “overly ambitious” and outright absurd, however, the rapid growth we’re seeing today with the arrival of the early adopters is vindicating this early group of visionaries. What will happen when the regular internet user arrives to Bitcoin? What will happen when everyone realises they can not only have an online bank account, but actually own their bank? What will happen when entrepreneurs in developing nations realise they can be “The” bank? What will happen when the billion plus humans who already have internet access but have zero access to banking find bitcoin?
No one can predict the level of innovation that will take place or the exact effects that bringing banking to the unbanked will have. What we do know is two things:
1. It’ll completely change the global economy.
2. Bitcoin’s deflation will explode downwards due to its Asymptotic supply algorithm.
What did I just say?
One of Bitcoin’s greatest value propositions is its known “set in stone” monetary policy and, unlike traditional government issued fiat currencies, no person or organisation can debase the value of bitcoin by printing more money. The amount of bitcoin coming into creation every ten minutes, halves every four years. From 2009 to 2012 50 new bitcoins came into creation every ten minutes, this halved 4 years later to 25, then halved again in 2016 to the current rate of 12.5 bitcoins every ten minutes.
Today, there is an estimated 15 million to 25 million owners of bitcoin. There is currently just over 16.5 million bitcoin in the world, so on average each user owns — on average — less than a single bitcoin. If the current growth of bitcoin follows the growth rate of previous internet trends, we should expect to see 100 million owners of bitcoin by 2019; in the year 2020 the bitcoin issuance rate will drop to 6.25 bitcoins every 10 minutes, which is around 900 new bitcoins a day divided up amongst a 100 million user base that is rapidly growing in size. I’ll let you think what effect this will have on the price, please leave your 2020 prediction in the comments below.
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.” – Satoshi Nakamoto