Misir Mahmudov, a well-respected crypto analyst and a bitcoin influencer has caused a stir among bitcoin critics. The analyst has argued that the reason why most educated people fail to see the benefits of bitcoin is because they are only specialized in one field.
Mahmudov who is also a financial economics student at the Columbia University says that in order for one to truly understand how bitcoin works, one has to acquire an understanding of basic economics and computer science concepts. Individual subjects on cryptography, central banking, game theory, distributed theory, and psychology also come in handy.
Undergraduate studies may focus on the broader perspective on the subject for example economics or mechanical engineering. But for a deeper understanding, one may need to put a single topic into perspective. Those who try to become masters in different subjects find it extremely difficult. Nonetheless, it is unnecessary.
Bitcoin’s History
When a bitcoin.org domain was registered on the internet over 10 years ago, it was of no importance. However, when a whitepaper was published by a pseudonymous going by satoshi Nakamoto in 2008 showing how the p2p cash system would work, it changed the entire financial playing field. Cryptography techniques were for the first time put into action and that has given birth to a now multi-billion industry.
Understanding Purchasing Power And Deflationary Assets
Bitcoin is unlike fiat currencies in a myriad of ways. One of the differences is the fact that fiat money has an unlimited supply and is regulated by central banks. While central banks can print an unlimited supply of money, bitcoin only provides a 21 million bitcoins supply. To understand this concept requires a bit of research into the numerous problems brought by the fiat system.
There is no doubt that the poor management of central banks and the excessive printing of money has borne out hyperinflation problems in countries like Venezuela and Zimbabwe. The currencies in these countries have become practically worthless. Millions of citizens have been left unable to realize the basic goods and services in these developing countries.
Understanding Bitcoin Arguments
A number of prominent economists like Dr. Nouriel Roubini have provided arguments against cryptocurrencies by explaining why the bitcoin idea won’t be successful in the long run. But in as much as many have publicly stated their lack of confidence in crypto, quite a number of prominent economists have expressed their confidence in the same system.
Dr. Saifedean Ammous is one of the crypto supporters. He affirms that bitcoin is a superior form of money. Nonetheless, understanding the two scholar’s standpoint requires basic familiarity with existing economic theories.
Vijay Boyapati, a former Google engineer is best known for his argument on why bitcoin is a great store of value. He also explains how opportunity cost comes into play and how it negatively affects bitcoin in becoming a medium of exchange.
Boyati is one of the scholars that have been able to understand and explain why and how bitcoin will become a legitimate and global currency in the future.
The Psychological Aspect Of Bitcoin
Before bitcoin or any cryptocurrency is adopted on a mainstream level, users need to be comfortable while using it. And that’s why a psychological perspective is needed when learning about bitcoin. People are more receptive towards products they are confident with, the opposite is true. It’s evident in countries where its financial institutions have messed up. Decentralization minimizes the trust given to these institutions.