Bitcoin Obsolete: Can It Be Replaced by New Technologies?
Introduction
The rise of Bitcoin as a revolutionary digital currency has been compared to many historical assets that once held significant value, only to become obsolete due to technological advancements. This episode of Not Just Numbers explores whether Bitcoin could meet the same fate as these assets, emphasizing the importance of diversification in investment strategies. We also feature a conversation with Carrie Reininger from Kitchen Me Now, where she shares insights into kitchen remodeling and the challenges of running a business in a constantly evolving industry.
The Historical Comparison: Bitcoin and Pearls
One of the central discussions in this episode revolves around an article titled Digital Gold or Digital Pearls, written by Jason Zweig in The Wall Street Journal. The article draws an intriguing comparison between Bitcoin and pearls, illustrating how scarcity can drive up value—temporarily.
A hundred years ago, a woman famously traded a New York townhouse for a Cartier pearl necklace worth around a million dollars. Over time, technology advanced, making it possible to culture pearls, reducing their rarity and, consequently, their value. While that necklace lost significant value over the years, the townhouse appreciated to an estimated $57 million.
This story highlights how perceived scarcity can inflate value, but it also serves as a warning: technological advancements can quickly change the landscape, making once-valuable assets less desirable. Could Bitcoin experience a similar downfall?
Bitcoin’s Vulnerability to Technological Disruption
As Mike Garry, host and financial advisor, points out, the value of Bitcoin largely hinges on its scarcity. Bitcoin’s supply is finite, a feature that has helped fuel its rise. But what if a new technology or a more advanced cryptocurrency renders Bitcoin obsolete? History shows that disruptive technologies can replace even the most dominant players in a market.
Examples like BlackBerry, Commodore, and MySpace illustrate how first-mover advantages do not guarantee long-term success. These once-leading technologies were eventually supplanted by rivals that introduced more efficient and attractive solutions. Mike suggests that Bitcoin, much like these technologies, could face a similar fate if newer digital currencies or technologies emerge.
The Risks in Bitcoin’s Code and the Need for Updates
Another significant risk associated with Bitcoin is its underlying code, which, like any technology, may need periodic updates to fix vulnerabilities. However, not all issues can be resolved, and any critical failure in Bitcoin’s code could lead to a drastic drop in its value. As Mike mentions, investors should be cautious and understand that no technology is infallible.
Diversification and Risk Management
The key takeaway from the discussion is the importance of diversification. Mike advises that while it’s fine to invest a small portion of your portfolio in Bitcoin or other digital assets, it’s crucial not to rely too heavily on any one investment. If Bitcoin succeeds, it could provide a nice upside surprise, but if it fails, your financial plan remains intact. Risk management, through diversification, is the most prudent approach to navigating the uncertain future of Bitcoin and other digital assets.
Insights from Kitchen Me Now: DIY-as-a-Service
In the latter half of the episode, we are joined by Carrie Reininger, owner of Kitchen Me Now, who offers a unique service model called “DIY-as-a-Service.” This concept allows homeowners to manage their own kitchen or bath remodels with professional guidance and support, a model that could save significant costs for those willing to take on parts of the project themselves.
Carrie discusses how her experience in corporate America and interior design, combined with her husband’s expertise in construction, led to the creation of Kitchen Me Now. Her approach focuses on making beautiful kitchens accessible to everyone, without breaking the bank. Carrie’s passion for helping homeowners tackle overwhelming remodeling projects aligns well with the financial lessons discussed earlier in the podcast—whether you’re managing your investments or renovating your home, it’s important to stay informed, plan ahead, and seek expert advice when necessary.
Conclusion
The potential obsolescence of Bitcoin serves as a reminder that no asset is immune to disruption. Investors must remain vigilant, diversify their portfolios, and understand the risks of investing in emerging technologies. Likewise, homeowners embarking on a remodel should plan carefully and seek professional help when needed. If you want more information contact us!
As Carrie Reininger’s innovative business model shows, even in industries like remodeling, there’s always room for creativity and innovation. Similarly, in the world of finance, staying ahead of trends and preparing for the unexpected is the key to long-term success.
