Bitcoin Lookback: Bitcoin Hits Parity with the US Dollar
Four years ago, on February 9th, bitcoin hit parity with the US dollar, making one bitcoin $1 on the now defunct exchange, MT. GOX (Magic, The Gathering Online Exchange. A most reputable exchange...)
A mere two years after its launch in 2009, Bitcoin went from being an online-only currency that "has gone from having no value at all to one with not only an open market of competing exchanges, but the ability to buy real goods and services like web hosting, gadgets, organic beauty products, and even alpaca socks." Source
That was a pretty big deal, alpaca socks aside. For Bitcoin users, this parity marked a significant move forward towards recognising Bitcoin as an valid, alternative currency that could actually compete with the American Dollar (FRN) in terms of equivalent purchasing power.
Fast forward to today. As of this writing, one bitcoin is equal to roughly $220 (depending on the minute and hour.) Considered still a technology in its infancy, bitcoin has a volatile market, and many users compulsively monitor its exchange rate for dips and spikes - whether to profit on trading, buy or cash out, or just out of amusement.
Jerry Brito of Coin Center offers a radical opinion: The price of Bitcoin doesn't matter right now...
Andreas Antonopoulos is famous for instructing us to ignore the price - the real value is in the technology - the blockchain.
In fact, something interesting to note is the amount of support tickets a service like ChangeTip gets regarding the price of bitcoin -- in that there are very, very few.
Of course, when a merchant receives bitcoin and the price is falling in front of their eyes, and they are worried they cannot recoup their costs - or when you are paid your salary in bitcoin, and are watching your earnings decrease or increase in value (compared to the USD), anxiety can surely set in. Why are we not seeing the same emotional response with price rises and dips when it comes to tips?
As Christian Williams, our new Head of User Experience, noted:
I sent a few tips around to people on Facebook and noticed that the one that was the most readily accepted was not denominated in bits, nor in dollars - but it was a rose. The act of sending someone a flower - and having my aunt think about me handing her a flower over the Internet - was the impetus to have her open an account and learn about Bitcoin.
I think in this regard, it's important to note the use case for bitcoin with micropayments. Bitcoin is simply the fuel that powers the online giving economy we call tipping -- the price does not reflect the thought that goes behind the act. Whether the rose is worth 10,000 bits or the equivalent in dollars now, and less tomorrow, or more -- the thought of handing someone a flower over the Internet is still there, and the emotion is remembered. This is the power of monikers.
In the end, some dedicated bitcoiners believe that one day we will simply consider everything in terms of its price in bits, instead of constantly comparing it to the Dollar. I know I had this conversation publicly over Facebook -- is it important to keep the value of bitcoin tied to the dollar? Minus a few online sites that accept fractions of a bitcoin for their goods or service, the day has yet to come where we refer to goods or services in their value in bitcoins alone; we still constantly tie the value of bitcoin to the value of the dollar.
With a technology as young and with far-ranging implications as Bitcoin, the price point nosedives (SELL IT ALL WHAT HAVE I DONE OMGZ) and exuberant soars (#TOTHEMOON!!!) have to be viewed in perspective.
Will the day come when we refer to everything we do, use, buy and sell in terms of bits, satoshis or bitcoins? Or will we always tie the value of our new system's currency to the value of the currency in the system we apparently wish to leave behind?
Hijacking Aaron Sorkin's lines in The Social Network, every setback to a Bitcoin-driven economy is a speeding ticket in the scheme of things.
What do you think?
Happy February 9th, everyone.