Agustín Etchebarne, our general director, explains the Bitcoin phenomenom
Bitcoin is undoubtedly a disruptive technology, the great idea of creating a virtual fiduciary currency with limited supply growth. However, if its ever to become a viable currency, it needs to have several characteristics, such as a reserve of value, serving as an accounting unit and being accepted as means of exchange. The former could be ensured as long as demand remains stable or keeps increasing and supply is limited. The second is more complex, given the high volatility of the new currency. But the key is in the third. The ability to use this currency as a mean of exchange. That requires that the use of virtual currency expands, ideally until make it becomes universal. Thus, the priests of bitcoin, preachers in the social networks of this new currency, were born.
This has an immense appeal, because as bitcoin’s user base expands, demand increases and the offer promises to be limited (though very few are able to prove this to be true), the predicted result is an increase in the price of this currency, even to exorbitant levels. Hence, someone that sells a few pizzas for 10,000 bitcoins and keeps them eventually gets USD 48,000,000. Great! … Up to a point.
The problem is that, indeed, the expansion of Bitcoin’s popularity increased its demand and its price. But everything is based on a myth, in this case the unlimited nature of Bitcoin’s offer. This belief was already destroyed, because in reality what you have is a cryptocurrency, and what has no limits is the creation of cryptocurrencies. So, now that it faces competition from other cryptocurrencies, they will all become very volatile because demand can fluctuate between each other, and changes in fashions can make this extremely fleeting.
Speculation will be intense, until the system collapses. This collapse will occur just when the market for cryptocurrencies reaches its fullness. At that time, States will have their own cryptocurrencies and will hamper the competition of private cryptocurrencies. Demand at some point will collapse and return to a marginal place, leaving millions of people frustrated. What will remain as wealth for humanity is the brilliant technology of Blockchain.