There are many points of debate about bitcoin. It’s dead. It’s not dead. It’s the greatest thing since sliced bread. It’s ridiculous to even think that it has a shot to be anything more than a fad that goes nowhere.
But there’s one thing that everyone can agree on: it’s impossible to predict.
When the calendar turned 2014 to 2015, bitcoin struggled to reach $300 – after flying high at 3x that earlier in the year. In 2016, bitcoin hasn’t dipped below $400. Yesterday, Jan. 21, bitcoin’s price around midday was $410.77.
But, increasingly, if you ask the bitcoin community, some of its most strident advocates are beginning to question its viability, including one of its most prominent developers.
The Developer Who Sparked The Debate
Mike Hearn, a prominent bitcoin developer, made headlines this month for giving up on the digital currency, declaring it a “failure.” He also wrote a lengthy, scathing blog post about the demise of bitcoin, which certainly doesn’t help the cause.
“From the start, I’ve always said the same thing: Bitcoin is an experiment and like all experiments, it can fail. So don’t invest what you can’t afford to lose,” the British computer programer wrote.
But then the kicker.
“But despite knowing that bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly. The fundamentals are broken and whatever happens to the price in the short term, the long-term trend should probably be downwards. I will no longer be taking part in bitcoin development and have sold all my coins,” he wrote.
He blames the bitcoin community for what he believes to be the failure of his once beloved digital currency. The decentralized digital currency, he writes, is controlled by few and is of a network that is “on the brink of technical collapse.”
“The mechanisms that should have prevented this outcome have broken down, and as a result there’s no longer much reason to think bitcoin can actually be better than the existing financial system,” he continued.
He’s right.
His post goes on to explain the science behind bitcoin’s “failure” as he calls it, and discusses how the community most involved is pretty much clueless. He claims that bitcoin can’t evolve because of its consolidation into too few hands, which will limit its power and stunt any potential it has to develop into anything of true value anymore, particularly to the masses.
“Bitcoin has gone from being a transparent and open community to one that is dominated by rampant censorship and attacks on bitcoiners by other bitcoiners. This transformation is by far the most appalling thing I have ever seen, and the result is that I no longer feel comfortable being associated with the bitcoin community,” he concludes.
Bitcoin’s Future Still A Big Question Mark
As you can imagine, there are those who disagree.
As New York Times reporter Nathaniel Popper, who wrote a book on bitcoin’s history and covers it as his beat at The Times, says: “The sense of betrayal is strong on both sides.”
“These internal struggles have surfaced at the same time that the Bitcoin technology is gaining credibility on Wall Street and in Silicon Valley. Throughout the various controversies that have plagued the virtual currency — including many instances of theft and fraud — the basic software has continued working as expected,” Popper wrote.
Popper believes there’s room for a middle ground in the bitcoin fight, but the interesting thing about the debate is that there’s really only two sides of the conversation: the bitcoin lovers and the bitcoin haters.
And, the fact that you can’t separate the bitcoin from the blockchain, which is the kiss of death – if you are a financial institution.
But the devoted remain so. Other developers, including Gavin Andresen, don’t believe in Hearn’s assertion that bitcoin is a failure. And there’s other developers who have come out of the digital woodwork to speak against Hearn’s claims, too.
“Mike Hearn raises several important issues. However, bitcoin has not failed. It is simply experiencing necessary growing pains,” Travis Patron, a Web developer and digital money researcher, shared on Twitter.
Anonymous. Unregulated. Permissionless. Under the control of a small number of people who control a large part of the bitcoin universe.
Just the way we’d want to architect our financial system if we were starting it from scratch.
Just ask Jamie Dimon.
Bitcoin Tracker Week 106: The Top Bitcoin News Of The Week
JPMorgan’s Dimon Bashes Bitcoin…Again
JPMorgan’s Jamie Dimon has made his opinions on bitcoin clear time and time again.
He doesn’t believe there’s any merit in bitcoin or digital currency. But that doesn’t mean he isn’t a believer in blockchain technology, which he noted was “real” during a CNBC interview at DAVOS this week.
Last time he was interviewed on the subject at a conference, he asserted that bitcoin was “going nowhere fast.”
And then this week he was asked again if bitcoin was making its comeback. Dimon spoke about how the conversations need to be about talking about bitcoin and blockchain as separate entities.
“There’s bitcoin, the currency, I think is going to go nowhere and that’s not because of anything to do with technology,” Dimon said. “Governments, when they form themselves, form their currency. Governments like to control currency [and] know where it goes and who it goes to and control it for monetary purposes. … There is nothing behind a bitcoin and I think if it was big, the governments would stop it.”
Another Day, Another Group Of Bitcoin Launderers
It’s not uncommon for the words “bitcoin” and “laundering” to appear in the same news story.
But what is a little more eye-catching is when a ring of 10 men have been nabbed by Dutch prosecutors on charges stemming from their alleged involvement in online drug deals that involved using one familiar sounding digital currency.
You guessed it. Bitcoin.
Dutch prosecutors released information about the suspects — all in their 20s, who were arrested after authorities conducted raids in 15 locations in the Netherlands. Authorities seized $16 million to $22 million (€15 million to €20 million) from these alleged bitcoin launderers, who are accused of selling drugs on Dark Web online marketplaces.
Hmm … sound familiar, again? Hint, hint. Remember Ross Ulbricht and his now-defunct underground bitcoin-funded online illegal drug marketplace, Silk Road?
The Big Bank Bet On The Blockchain Continues
The blockchain is getting some major attention from 11 big banks, including Barclays, UBS and HSBC, all of which have shown their affinity for blockchain’s tech for some time.
Reports this week indicated the banks are testing a system that uses blockchain to make financial trading faster and cheaper. The banks involved are part of a larger group of 42 major lenders who collaborated in 2015 to work with the company R3 on innovating blockchain in ways that can disrupt how the financial markets operate.
Across the financial ecosystem, banks have been exploring ways that the blockchain — the decentralized ledger and technology that powers bitcoin transactions — could be used to exchange data, assets and currencies. The real benefit from what the banks’ leaders have expressed is the potential to make their operations more efficient and more transparent.
China’s Bank After Its Own Bitcoin
The digital currency market just got a nod from a somewhat unexpected source.
The People’s Bank of China announced this week that it has interest in creating its own digital currency in order to reduce the costs associated with physical paper money. The bank noted it also wants to give China’s policymakers more control over its money supply.
As a result, China’s central bank has tasked its research team to dig into the potential of developing digital currencies.
“The team … should set up a clearer strategic target for launching digital currencies, overcome the key technological barriers … and aim for an early launch of the central bank’s digital currencies,” the PBOC said in a blog post.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More