this week in February of 2018, the bitcoin price is at USD 10,000. In 2011, the price is only USD 1.
If you invest Rp 1 million just to buy bitcoin in 2011, today your investment value will be Rp 10 billion.
Is there any other bitcoin and cyrptocurrency a radical innovation, or a sensational and irrational bubble?
First of all it should be mentioned that cryptocurreny may be one of the most radical innovations in the history of the currency over the past 1000 years.
Bitcoin itself is just one of the most dominant types of cryptocurrency. Other popular cryptocurrency types are Ripple and Ethereum.
Bitcoin and his comrades have a truly heroic mission: to be the world's digital currency, with the same value anywhere in the world. A radical yet plausible idea in this age of digital explosion.
Cyrptocurreny in other words wants to be the global curriculum of a globally applicable world. If this dream materializes, then slowly the role of the Central Bank may become extinct.
In the digital world, the ambition of bitcoin and other cyrptocurrencies to become the world's single currency is a brilliant one: making the transaction process very easy, super efficient, and able to eliminate transaction costs that are often imposed by conventional banks.
Cyrptocurreny can also make us store wealth assets only in a "digital safe" that does not require the flurry of old school records.
With all that, cyrptocurrency can also slowly make conventional banks extinct like dinosaurs in antiquity.
The workings of this cryptocurreny is actually similar to gold. These two assets are different thousands of years old, but the essence of its function is similar.
Both can be an alternative currency, without the need to intervene between the bank and the central bank.
Thousands of years ago, people trade and trade with gold coins (or dirhams). The gold at that time served as a "currency", which was efficient and not complicated (without the intervention of the central bank and bank, which did not exist at that time).
Thousands of years ago, gold and dirhams became an elegant currency, and because at that time there was no bank, so also free usury. (This is why some of today's anti-riba people want to promote gold or dirham back as a currency).
The problem, how bothered in the current era when buying and selling should use gold or dirham as currency. Cook want to buy goods in Tokopedia, must send gold coins or dirham coins first via JNE. Ribet and unsafe.
It was cryptocurreny.
The basic idea of crytocurrency is exactly the same as the idea of gold users thousands of years ago: both want to be the world's single currency, simple and powerful, without the intervention of banks and central banks.
But if gold is a bar and coin shape, if bitcoin form is a brilliant digital innovation called blockchain technology.
With the form of digital coin, then how easy the financial transactions can be done through the prevailing global cyrptocurrency. No more physical banknotes that were red, purple or green.
The question: then where are the other bitcoin or cyrptocurrency values agreed?
Again, gold with bitcoin differs in its thousands of years.
But there is an eternal principle that will never change until 3000 years. Namely: either gold or bitcoin, its value will be determined based on the balance of supply and demand. This is the eternal law of economics.
From the demand side, the value of bitcoin or cryptocurreny will be determined to what extent businesspersons are willing to use them. How high is the potential number of global business people who are willing to accept cryptocurreny.
The data shows the total world trade transactions per year is currently around USD 100 trillion (do not know how many zero). What percentage of transactions can cryptocurrency take?
The insane bitcoin rise in the last 3 years, partly fueled by optimism that Bitcoin will be the best cyrpto, and that they can grab at least 1% of the world's trade value (or equivalent to 1 trillion dollars).
So the first determinant of the value of bitcoin and other cyrptocurrency is as described above: how many potential business actors want to use digital currencies (and forget about conventional currency).
In addition to the DEMAND aspect, the next decisive element is SUPPLY (Supply).
This is where we get acquainted with the genius algorithm technology called blockchain.
Simply: this blockchain system aims to keep the value of digital currency always transparent; trusted, and absolutely can not be manipulated.
The genius of blockchain, the belief system is built via an intelligent algorithm; and does not need a third party like the Central Bank that is pretentious in controlling and controlling.
In addition to demand, the rise and fall of the bitcoin value will depend on the supply. Well here we come back.