The price is up! Up up up! Bitcoin faithful everywhere have been feeling the sweet vindication of a massive increase in bitcoin value, with a contentious fork in the midst of a tumultuous rally failing to slow the climb. A new all time high in price has produced significant media coverage, reminding many users and followers of the first major bitcoin bump, which precipitated massive inflows of venture capital and public interest. The dream of “mass adoption” is once more on the horizon. So why isn’t anyone using bitcoin? It isn’t useful.
The value of bitcoin has been a constant and at times singular focus for much of the bitcoin community. This is a direct representation of the user base, and presents a comparison for what bitcoin actually has come to be. For reference, do users of dollars continually root for the increase of the dollar? Canadian dollars? Euros? Surely some currency traders, specialists who focus on narrow shifts in pricing, root for ups and downs. But the peaks of almost all currencies are minimal. Bitcoin believers often cite volatile nations as validation for bitcoin’s “stability”, but cherry picking the world’s most unstable currencies is not a rational or adequately comparative approach. So what type of thing is surrounded by a community actively rooting for the up or down trend in value? A commodity.
The abandonment of technical progress in the bitcoin project has helped spawn copycat digital currencies that possess superior “fundamentals”, with bitcoin still enjoying supremacy for now. This situation can change, and likely will, as bitcoin continues to be a major vector for online crime and money laundering. The history of bitcoin is directly related to scams and crime, as even a cursory view of previous events has to mention moments like Mt Gox, Bitfinex, Cryptsy, and innumerable wallet hacks. This instability of bitcoin as a commodity has produced a large trading community, which provides liquidity and energy for the services that enable their endeavors. The unregulated nature of bitcoin trading has produced an equal energy for defrauding the bitcoin community. A digital currency that instead trades like a commodity, supported by a community that is much more interested in making money than advancing its nascent technology, and is continually best by scams, hacks, and competitors…is this a competitive model?
So who is using bitcoin? Only a few groups of people, if groups and businesses that accept bitcoin are any guide. Darknet markets, speculators, and a few niche users who find small and a few large businesses who accept bitcoin. This is not good news for bitcoin. Increased scrutiny because of ICO scams may draw the ire of large regulatory organizations in the near future, providing justification for additional measures restricting bitcoin as well as other digital currencies. On the venture capital front, much of the attention has shifted to blockchain based firms and companies that deal less with bitcoin and more with broad technical programs – they can pivot away from bitcoin if it becomes necessary. While the price of bitcoin lulls believers into a false sense of security, the failure to maintain technical superiority should be a big concern.
The future of bitcoin is anything but certain. There is little previous information to form an educated opinion on the future of digital currencies, but the echo chamber surrounding bitcoin creates an atmosphere that is impenetrable to rational scrutiny. The leaders within bitcoin are not adequately assessing the risk posed to bitcoin. Political motivations and personal enrichment will only carry bitcoin for so long, what is needed is forward looking leadership. At the moment, delirious bitcoin owners can only see the value of their speculative assets. In the future, however, their tulips, errrr, bitcoins may seem less enticing.
Image – Public domain image by Satoshi (Source)