Is Bitcoin really the new Gold?

Social Commentary

Is Bitcoin really the new Gold?

Illustration: Shruti Yatam

Mondays can be stressful, and there’s a good chance you are having a bad day. But thank your stars, at least you’re not Laszlo Hanyec.

On 22nd May, 2010, Laszlo Hanyec bought a couple of large pizzas and paid for them using 10,000 Bitcoins. At the time, 10,000 Bitcoins were worth about $40. For him, it was just a fun transaction with a new medium of currency that he didn’t think to be of much value.

Today those 10,000 bitcoins are worth $95,425,325.  That’s $9.5 crore for those of you who get confused by big numbers.  It’s a number that’s so outrageous that there’s a dedicated Twitter account that just tweets the current value of those two large pizzas.

A minute’s silence for Laszlo, please.

Bitcoin’s price has risen over 12% in just the last week, as it crossed the $9,000 mark. It has risen 650% since April. The rise has been sharper than Donald Trump’s tweets at Kim Jong Un in the last few months. Bitcoin is now worth more than an ounce of gold, and it has attracted attention of Gujju stockbrokers with two phones who travel in the local train and furiously trade daily during their ride. When the Gujju’s come in,  you know a commodity has made it.

From being the preserve of tech nerds and geeks a few years ago, Bitcoin seems to have gone mainstream. India hasn’t missed the boat, as about 11% of international trade is coming out of the Indian Bitcoin exchange market, despite the RBI flagging various warning signs.

In India, Bitcoin isn’t a legal payment method, and investors accepting them would be doing so at their own risk. But Bitcoin isn’t illegal either. A lot of Bitcoin ponzi schemes have also been discovered in India, and people have been arrested as well. The clarity on Bitcoin regulation in India is very similar to the smog in Delhi – there’s none whatsoever.

From being the Internet’s shady anonymous currency that facilitates online black markets, Bitcoin has become a serious investment option.

The lack of regulation has been a party for folks who have gone on to become millionaires overnight, both in India and globally. People who bet on the hottest virtual currency years back have become crorepatis, without having to meet Amitabh Bachchan. It has also unearthed a whole new genre of teenage millionaires who, at 18, have the kind of money that could easily sustain them for their entire lifetimes. In a world of fading, uber-rich industrialists and liquor barons, Bitcoin millionaires have continued the trend of young tech-geek entrepreneurs making crazy amounts of money.

The make or break question for Bitcoin will hinge on financial regulations. Whether we will have them, when will we have them in place, and how much will they interfere with the core principles that Bitcoin was founded upon? After all, the founder of Bitcoin, Satoshi Nakamoto, is still incognito, his identity is a big mystery and if there’s something Governments are not fond of, it is anonymity and secrecy.

From being the Internet’s shady anonymous currency that facilitates online black markets, Bitcoin has become a serious investment option. And as Indians, we have love to save and invest. What gold was to our parent’s generation, Bitcoin could very well be to the millennial generation.

While your dad told you tales of how one could buy an ice cream for a rupee during his day, Laszlo will be left telling his children of the time he bought two pizzas for $9.5 crores.