Bitcoin: New Generation Of ‘Hard’ Wallets Bodes Well For Long Term Value
Martin Tillier
When you break it down, there are two things that give a currency, any currency, value. The first is trust. Those using a currency have to have a way of storing and transacting with it that they believe is relatively secure, and they have to believe that others feel the same way and will accept it as payment. In addition they must have faith that the currency will retain its value in terms of the goods and services it will buy.
The second is what economists call the network effect. In other words, the idea that others use the same token for exchange, and the more any given token is used, the more value it has. This concept and how it applies to Bitcoin is explained well in this Ybitcoin article by David Perry. The article also explains that the network effect depends on ease of use. Indeed that is why currency came about in the first place. In a barter system, exchanging chickens for milk is a hard thing to do if the milk farmer already has enough chickens, but it is easy when a currency that has value in terms of both, and just about anything else, is used.
The retention of value over time is, in theory at least, built into Bitcoin. The limited supply and reduction in the rate of issue that is built into the protocol should ensure that as economies grow the currency increases in value. There will be an expanding amount of goods and services, but a finite amount of Bitcoin. The amount of things that each coin can buy, therefore, will increase. That is only true, however, if the first and second criteria for value in a currency are met, and that is where hardware wallets come in.
These wallets allow you to store your Bitcoin securely and in some cases still carry them around for easy use in physical locations as well as for purely online transactions. One of the latest and, according to some reviews such as this one at Techcrunch, maybe the best is the Case, but there are several others, most notably Trezor and Ledger Nano. I haven’t used Case, but the multi-sig security, fingerprint technology and network connectivity all make it sound like a winner. Whichever is your preferred model, however, the increased security and usability that the new hardware wallets offer are major steps forward for Bitcoin, and are likely to increase that elusive trust in the currency.
The second requirement for value in a currency, the network effect, can only really come when the first, trust is achieved. Having a storage system for Bitcoin that is in many ways more secure than those offered for conventional currency and yet offers almost equal portability and ease of use is a huge step in that direction. In the immediate future the price of Bitcoin may go up or down, but as the businesses surrounding it continue to innovate and the resultant trust spurs the network effect, the long term value of the currency looks likely to keep increasing.
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