Service as a form of value comes in many different forms. Some of Bitcoin’s criticisms center around the topic that Bitcoin doesn’t provide anything that can be associated with as a form of product or service for us to derive a value from. Bitcoin is often compared with gold for which identifying forms of gold’s service seem easier to grasp.
Gold use in electronics or dental fillings, although less than twenty percent of annual harvested gold is used in these industrial uses, is a form of its service. A portion of gold is made into coins and bars for trading as another form of use or service to the consumer. The majority of gold, around eighty percent, is used for jewelry or decorative uses. All of these uses provide a benefit and a function of service to the consumer for gold.
Yet, gold has a dark side, with the topic of environmental preservation at the forefront should be brought to light more often. Gold mining is abusive to the environment. According to the web gold mining is the largest cause of mercury pollution into the environment. Small artisanal miners account for approximately fifteen percent of world mining, and seem to be the biggest abusers of toxic mercury usage, since they operate in many countries where they can’t be policed properly to ensure safety.
Gold mining is disruptive on nature’s habitats. Beyond the digging and turning of the earth to find and locate the gold the mining process of gold also dumps waste back into rivers and oceans. It is estimated the mining of gold for one wedding ring produces 20 tons of waste back into the environment.
As of recently the media has blasted the claims of Bitcoin being a bad environmental neighbor. These reports with the difficulty of not having an understanding of the service that Bitcoin mining provides makes it hard for investors to see value in Bitcoin. Even though almost 40% of the energy used for Bitcoin mining today comes from renewable energy plants the conversation creates discord.
Bitcoin’s Core Service
Bitcoin’s core service is in the form of transactions. Much like that of a software built to search the web, or run your cell phone, or transfer money online, Bitcoin builds decentralized blocks where transactions can be completed and tracked. Combined with other developed platforms that compliment Bitcoin, such as the lighting network, Bitcoin’s limitations of cost and speed are being addressed in order to make it functionally better.
As stated in Satoshi’s white paper, Bitcoin “is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.” Bitcoin’s most ardent feature is it’s decentralization, and not being able to be controlled by any one centralized person or government. Combined with the scarcity of it’s coin Bitcoin in its purest form provides benefit and service.
The perceived negative side of Bitcoin is its energy consumption. Harped on by those that don’t understand, this component of Bitcoin is a benefit rather than just an added security feature of Bitcoin. Bitcoin’s energy consumption allows it to be a resource to renewable energy growth expansion in our world. Bitcoin’s miners ability to consume energy that would otherwise be wasted along with its operational portability and flexibility presents a unique opportunity. Bitcoin mining’s power consumption can offset the risk of constructing new renewable power plants. One of the largest risks of committing capital to the construction of a new renewable energy plant is the reality that there won’t be enough buyers for the power after the plant is built.
A Bitcoin mining operation can be built anywhere, and turned off at any time. So a new wind energy plant in the desert can now justify its cost, since the plant can contract with a Bitcoin miner to consume the renewable energy produced that would otherwise be wasted. Wind, solar, and hydro renewable energy’s geographical limitations from cities often only permit thirty percent of the power from a renewable energy plant to be consumed. Alleviating the cost concern of a new plant running at a negative cost upfront is an asset that is unique and hard to duplicate.
Solving renewable energy growth issues isn’t Bitcoins only service it has provided. Bitcoin has brought another service aspect to the forefront of our world that is often ignored. Altcoins or tokenization is allowing the development and production of new software projects to happen faster and in greater numbers. These new projects popping up have many functions from tracking data, running tasks, and handling transactions just like much of the software we use today.
In the past, if a software developer had a new build idea for a software product they were limited by constraints of funding to get the project off of the ground. This usually meant the software developer would have to find investors and give up portions of the business in order to move forward. This way of funding a project is a centralized system which gives a small group too much say.
This traditional system of a start up benefits those with massive amounts of free cash such as many of the large dominant software companies of today, and makes it easier for them to get larger by funding these projects. So unless a developer can appeal to a few with large amounts of capital to fund their project, the project may not get off of the ground.
Enter alt coins or tokens, and software developers can now launch a project using coins or tokens in a decentralized manner. The developer can build the project, and put it out to the software community. If the decentralized software community likes a project then they can take part and participate in the software growth by taking a stake via coins or tokens which often gives them voting rights in the future direction of the software.
The coins or tokens provide an asset resource for the founding developer to forward fund the project. The decentralized development happens faster and enables more projects to come to the forefront quicker benefiting consumers. It’s much like a hive of bees where the community of bees builds for the better of the hive and directs the queen. The service for consumers is better software products being recognized faster without a centralized organization choosing the outcome or controlling consumers.
This aspect of service brought to the forefront by Bitcoin doesn’t get enough attention. In many ways it resembles the dot.com explosion in the 2000’s. The early excitement and then the proof of service coming forward over time to the consumer. As always there will be resistance and misunderstanding of the service it provides to consumers, but the function will win out fears.
As an ardent believer in value investing, I haven’t been able to find the value inherent in ownership of gold in the past, since it doesn’t produce or change anything and does little as an investment other than potentially combat inflation. Bitcoin is different. Its scarcity combats inflation, it is easy to exchange worldwide, it is has created a new network, it can help to solve some energy issues, and it provides the ability for small countries and states to have a digitized financial system without massive costs.
Bitcoin, in many ways, is about change and freedom. Bitcoin’s change is it’s ability for us to adapt to a new way of financial transactions and energy consumption. Bitcoin’s freedom is it’s potential to lower a countries border walls, provide banking to the rural areas, and potentially forcing governmental to change.
For a person willing to work hard and earn they now have a choice of placing their savings in something that has no boundaries or corrupt government hindrance allowing them the ability to find true freedom without losing everything. There are many places in this world today where people would much rather own a fiat free currency than the currency of their country.
So Bitcoin’s service is much bigger than that of a simple coin created to incentivize transactions and the decentralization of the network. It creates opportunities for change which can be good for the way people live and treat our world. Bitcoin offers value. Value that may be a bit unique, yet it offers worth to many.
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