On December 10, 1999, Amazon stock prices closed at $106 a share, which was no more and no less than 67 times the price from just two years prior. In the same time, many newspaper articles stated that there was no doubt that the shares of the Amazon were just an irrational bubble.
Indeed, the pessimists were temporarily right. In September 2001, Amazon shares would see a dramatic fall to $6. However, only two days ago, on January 9th, while the stocks of many rivals collapsed, Amazon shares rose by more than 11 times than their 1999 value, reaching more than $1.252. Since 1999, Amazon’s investors have made an annual return of 14.6%, much higher than Standard & Poor’s.
Currently, Bitcoin is achieving unprecedented highs, as well as many other digital currencies. Just as it happened with Amazon, there are many people who now say that Bitcoin is nothing more but a clear bubble. The other party is made of digital currency enthusiasts who see Bitcoin as a logical extension to the digital commerce world, that will shape the future of the economy.
So far, global commerce is recognized in many local currencies, which sum up to around 180. Most of them can be freely exchanged but only the national currency of a country is used within that particular country, and transactions between any two countries are currently expensive, not very efficient and slow. Cryptocurrency optimists believe this will come to an end, and that in the future, national currencies will be replaced with major digital currencies. For example, there may be several currencies – or just a main one – used for airline travel. If you want to pay for your or a friend’s tickets, you won’t need a credit card anymore, but simply send the “codes” or “tokens” required for purchasing airline tickets.
In this global economy, Amazon could have its own currency; Facebook could have its own currency, and so on. Very much similar to the Internet, these currencies will not be limited by any kind of boundaries, other than the measures required to comply with national laws.
National central banks will also issue their own currencies, as they do now, but electronic – like the cryptocurrencies, and will mainly be used to pay government employees, contractors and pay taxes. These currencies will be easily interchangeable, just as national currencies are now. Bitcoin may become a “standard” in this digital economy. Historically, gold was the main currency until the mid-1970s when the US took the dollar off the gold standard, although many gold enthusiasts still consider it the only reliable asset. Since then, gold has been mainly replaced by the USD. This is one of the main reasons that led to the appreciation of the dollar.
Be the first to comment