It was my senior year of high school and one of our teachers called us in a room full of new computers. We were instructed to sit down and “surf the web.”
“Surf the web?” What did that even mean? At the time I did not live anywhere close to the beach and couldn’t really understand this concept of web surfing support and resistance. It was clunky and pages were slow to load. There was no way that this was going to be useful. I went back to the library later that day during study hall and read the newspaper. You know, the ones you see in hotel lobbies and occasionally outside of restaurants.
All kidding aside, when people are used to doing something a certain way for so long it truly becomes part of who they are. I have operations management experience and every time I attempted to change the process or way of doing something to make it more efficient I was typically met with resistance.
Some people are far more married to certain ideologies than others. We see it everywhere. I see it with the older generation at church not liking the newer music. Or, for example, the National League baseball purists despising the idea of the designated hitter. How about even simple things like when Facebook or Twitter changes the user interface? Don’t mess with my timeline! LOL.
Why then should it be any different for Bitcoin or any cryptocurrency? I talk to people every day who are educated and successful and yet still can’t wrap their heads around cryptocurrency. To me it is like explaining how to surf the web to people in 1994.
For centuries people have had it ingrained in their brains that money issued by the government meant it had value.
Fiat currency (money issued by a government – USD, Euro, Ruble, etc) has this connotation behind it that because the government printed this it MUST be of value. While it is true that our dollars have value, most people think it is because it is backed by something. As a society we have decided that shiny minerals we dig up from the ground are “valuable” and therefore so is our money.
When economies are humming along and governments aren’t overbearing and people have a relative “trust” in them then yes, fiat currency works quite well. What happens when we tip that scale and things don’t go so well? Economists have varying opinions on that, but most of the time governing bodies will step in and try to stimulate the economy. This is done by manipulating the economy via tactics such as lowering interest rates or quantitative easing. Governments love to turn on the printing press when things go bad.
These types of scenarios can lead to distrust, or far worse. Recessions can turn into even bigger problems such as price controls or food shortages. Just ask the people of Venezuela who are protesting in the streets on a daily basis. This is because their government backed Bolivar now has seen triple digit inflation and it’s not even worth the paper it’s printed on. Let that sink in.