Ancient writers, medieval showmen, and modern fear mongers had it wrong. It isn’t some mythological beast that will rob you of your soul; it is the study of economics.
What is unique about Crypto and Blockchain?
Hey, want a field where you cannot wow people at parties with what you do? Economics is the field for you. The insanity that comes with reading for the umpteenth time industry X did the same thing as industry A through R is a wonderment no one should live without.
Yet as a soulless husk of man, I can tell you how crypto derives its value and how blockchain technology drives innovation in industries like gambling. To understand how these are valued, one needs to understand the history of capital.
Capitalism is oft misunderstood and owed to certain schools of political thought deriding it as the cause of every ill in the world. According to them it seemingly can shapeshift into policies they once stood for and pod person their former allies.
Unfortunately for our amusement, capitalism is not so magical. It is at its more primal definition, a system of (ism) capital.
What is Capital?
It is a fictitious economic good utilized to store value to facilitate trade. We decided chickens and cows just weren’t cutting it as a currency at some point in history. Probably something to do with needing change which created the chicken nugget and burger. Kidding, of course.
During the time, when livestock was utilized as a currency, they were tools of barter. Often this meant you had to go barter with someone who had something the person wanted.
Without the social pressure to maintain a sense of community, you can quickly figure out the drawbacks to this barter system. Chiefly it would never permit the existence of modern civilization or even medieval civilization.
Eventually, civilizations started using shells or other decorative items to facilitate trade, then around 1000 BC, civilization started coining money out of basic metals.
As basic metal possessed an intrinsic value to society, coins carried an intrinsic value. Capital needs to derive value from something. Sometimes it is from what the capital is minted out of. Such as gold, silver, and bronze coins of the medieval ages. Other times currency is backed by what is referred to as a standard.
A standard is in basic terms, something backing the currency. This has ranged from gold and silver in the west to the rice standard that was popular in Asia. In the latter’s instance, you
could take your currency to any central repository of grains to exchange the state minted currency for a certain volume of rice per value of the currency.
Standards make it difficult to hide currency debasement as part of currency wars or currency manipulation. The difference is the party’s size, but it always ends with inflation, loss of relative purchasing power, and regret.
This created the demand for a decentralized currency and blockchain technology that facilitates crypto filling that need.
How does Crypto Derive its Value?
Unlike the faith-driven fiat currencies, Cryptocurrencies are secured by blockchain technology. A currency that can be forged or not secured is destined to lose its value. There remaining two mechanisms that drive crypto’s value is scarcity and demand.
As coins are secured by the blockchain-driven ledger, ensuring there will only be so many coins, creates what is known as scarcity. Now scarcity doesn’t create value on its own. If you’ve ever known a person who everyone is happy to have scarce, you can verify this yourself.
That sounds funny but is the same principle at play. Merely not having a lot of something does not grant it value if no one wants it. Thus enters demand.
As crypto is adopted by more companies, is accepted by more financial institutions, and brought up by more billionaires the demand exists for what is a finite resource.
This is what creates value. The market, a collection of what people are selling and what people are willing to pay for it, then determines each coin’s approximate value.
Now imagine combining both blockchain technology with cryptocurrency. Well, you don’t need to imagine because the betting industry has done that for you. To be more precise, check out more information at the provided link.
Why it’s Revolutionary
What makes this revolutionary is the sites are built using blockchain databases, which grant more security and anonymity to their users.
It also allows for more efficient and expedient payouts after the results are in. Allowing you to know whether to boast again about your system or swear no one will ever learn the dark secret of your loss fast.
Now add to that the anonymity, security, and store of wealth that comes with crypto, and you have a recipe for success.
Regular currencies lose their relative purchasing power and inflate yearly. Compare that to cryptocurrencies where someone could have owned only $70 a year ago and now has over $500. Mathematically speaking, traditional currencies are a risky investment.
You have to be on top of turning a profit on an investment and also earn more than the degradation in the currencies purchasing power.
Cryptocurrencies do not have this inherent risk over the long term. In the short term, the value may fluctuate, but the trends show the currency is only increasing in relative purchasing power against fiat currencies in the long term. Thus betting is safer, more efficient, and a better investment when done with the blockchain and crypto.