Bitcoin [BTC] made headlines this week after the world’s largest cryptocurrency broke the $5000 threshold, following weeks of stagnant movement. The price rise also led to many proponents of the space coming out to speak in support of digital assets and the concept of decentralized applications. The latest luminary to do so is Erik Voorhees, the Chief Executive Officer and Founder of Shapeshift, who tweeted,
“An asset like Bitcoin cannot rise steadily over years as adoption advances. For upon seeing an asset rise by, say, 5% per month for XX months, rational actors will front run that growth, causing inevitable bubble and burst. There is no other way.”
To this tweet, Vijay Boyapati, a Senior Software Engineer at Peach responded,
“This is the one major hole in the Mengerian account of the origin of money. As a good becomes more marketable its purchasing power rises. This presents an opportunity to entrepreneurs to speculate on the possibility (likelihood) of future rises, which increases its marketability. The whole thing is a big feedback loop which drives societies to quickly standardize on a single money.”
Voorhees’ comments came in the wake of many financial analysts predicting the downfall of Bitcoin, as evidenced by many articles that surfaced online recently. One standout example of this was a piece published by the New York Times, stating that Bitcoin was not ready for mass adoption yet.
The article also touched on the supposed failure of Bitcoin to reel in institutional investors to its fold and talked about its sinking prices. Members of the cryptocurrency community did not take the comments lying down as Asiff Hirji, the COO and President of Coinbase, called the article extremely ironical because Bitcoin had just broken the $5000 mark. The basic gist of the articles was encapsulated in the introduction which said,
“Some cryptocurrency enthusiasts had hoped that the entrance of Wall Street institutions would give them legitimacy with traditional investors. But their struggles — and waning interest — illustrate the difficulty in bringing Bitcoin from the fringes of the internet into the mainstream financial world.”
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