Bitcoin, the world’s first decentralized digital currency, has been making headlines recently as the news of collapse of some quite big banks is coming from US. My friend Amit Khemka has called this “the bitcoin moment,” comparing it to the demonetization of Indian currency in 2016, which led to the rise of mobile payment platform Paytm which can be described as “Paytm Moment”.
But what makes this “the bitcoin moment,” and what does it mean for the future of finance?
To understand why this moment is significant, we need to look at the history of bitcoin. Bitcoin was created in 2009 by an unknown individual or group using the pseudonym Satoshi Nakamoto. It was designed to be a decentralized alternative to traditional currencies, which are controlled by governments and financial institutions. Bitcoin is based on a technology called blockchain, which allows for secure, transparent, and decentralized transactions.
For many years, bitcoin was dismissed as a computer game for techies with little practical use. But over time, more and more people began to see its potential. One of the key selling points of bitcoin was its security. Bitcoin advocates argued that traditional banking systems were vulnerable to fraud, corruption, and cyber attacks, and that bitcoin offered a safer alternative.
Slowly, people started to understand that this money is not safe in banks and the government might seize bank deposits because of various reasons. Bitcoin saw a surge in interest as people began to look for ways to protect their wealth from such a scenario.
Fast forward to 2016, when the Indian government announced that it was demonetizing the 500 and 1000 rupee notes, which accounted for 86% of the cash in circulation. The move was intended to crack down on black money and corruption, but it had a major impact on the country’s economy. Many people suddenly found themselves without access to their money, and there were long lines at banks and ATMs as people tried to exchange their old notes for new ones.
This was where Paytm came in. The mobile payment platform had been around since 2010, but it really took off after demonetization. With so many people struggling to access their cash, Paytm offered a convenient and secure way to make transactions using their smartphones. The company saw a massive increase in users and transactions, and it helped to popularize the idea of digital payments in India.
Now, in 2023, we are seeing a similar moment with bitcoin. As the value of traditional currencies fluctuates and governments around the world print trillions of dollars to combat the economic impact of the pandemic and this new banking collapse, many people are looking for alternative stores of value. Bitcoin offers a secure and decentralized alternative to traditional banking systems, and it has seen a surge in interest as a result.
In conclusion, the rise of bitcoin can be seen as a significant moment in the evolution of finance, similar to the rise of Paytm after the demonetization of Indian currency in 2016. The view of bitcoiners that traditional banking systems are vulnerable to fraud and cyber attacks is turning out to be true day after day, and many people are looking for alternative ways to store and transact their wealth.
