Has Bitcoin Failed to Deliver?

Bitcoins support base maybe doing more harm than good to the cryptocurrency and keeping it from succeeding.

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Has Bitcoin Failed to Deliver?

Bitcoin has often been compared to the Internet itself. A project that will change the very world that we live in. The Internet has come to define the age that we currently live in, but can the same be said of Bitcoin? Has Bitcoin been an empty promise? Well, the truth is that we need to dig deeper into that question, and more importantly, we need to ask that question.

A zealous missionary base

The problem with Bitcoin is the people who embrace it. Bitcoin attracts a fierce and zealous base, who are unlikely to encounter any criticism or see opportunities where there are aplenty. There does exist various applications for Bitcoin with its pan-global availability, non-political nature and ease of deployment, but are they really being explored?

The United Nations Research Institute for Social Development published a working paper titled “How can cryptocurrency and Blockchain Technology Play a Role in Building Social and Solidarity Finance” in January 2016. It was authored by Brett Scott. Scott writes: “One nascent phenomenon related to Blockchain technology is the emergence of what might be called techno-libertarian evangelism — the presence of Blockchain “missionaries” in developing countries articulating a technology-as-saviour and markets-as-saviour gospel alongside an anti-state message."

For example in Ghana, a group called Africa Youth Peace Call organized a 2015 Blockchain Land Title Summer Liberty and Entrepreneurship Camp to discuss how land registry can be moved from state institutions to Blockchain ledgers. The group’s stated objective is in “teaching free-market ideas and skills to the people of Africa, ”but despite appearing as a Ghanaian organization, most of the group’s board are foreigners, including American free-market economists Ken Schoolland, Warren Coats and Louis James, and libertarian activist Michael W. Dean (Africa Youth Peace Call 2015).”

The reluctance of Bitcoin evangelists to work with state structures is actually a hindrance rather than an enabler for Bitcoin as a currency. It also poses a question if ideology triumphs over the larger goal of distributing Bitcoin into the hands of everyone.

Consensus leads to status quo

We have covered the capacity constraints of Bitcoin in detail but it has also led to disillusionment and disappointment with the cryptocurrency, including its former backers, Mike Hearn being one of them. Mike, who was a senior developer working on Bitcoin and a former chair of the Bitcoin Foundation’s Law and Policy Committee, aired his disappointment with Bitcoin in a Guardian article:

“What was meant to be a new, decentralized form of money that lacked ‘systemically important institutions’ and ‘too big to fail’ has become something even worse: a system completely controlled by just a handful of people.”

When people can’t agree on what course of action the currency should take for its future growth and it is facing bottlenecks as it is now, the only course open is to continue along the same path. Overall, it raises the question of whether Bitcoin is sustainable.

Bitcoin has failed in its goals

Although Bitcoin has been around now for nearly a decade, we must now ask ourselves the question, what really does it have to show for itself? Sure the technology behind Bitcoin has been adopted globally and there are plenty of projects that are being built around the Blockchain, but what of Bitcoin itself? Has Bitcoin really unleashed the revolution that it promised it would? The big banks are still around, so are the wire companies like Western Union and Moneygram.

In fact, many of the people that Bitcoin was supposed to put to pasture have now adopted the Bitcoin tech and are still around. So the libertarian vision of a decentralized currency run on cryptographic democracy has not really materialized. Instead, we are still living in a world of governments, banks and big financial services businesses.

Common people, the kind that was supposed to use Bitcoin, are still probably using checking accounts, sending money by WU or using a debit card issued by Visa or Mastercard. Bitcoin for them is way too complex and has an aura of mystery surrounding it.

We are all too dumb or smart for Bitcoin

You could argue about it either way but the end result is the same. You could say that people are way too dumb to adopt Bitcoin or Bitcoin is way too complicated for most people to use. The end result - not many people use it. In order for Bitcoin to realize its potential, it truly needs to be the currency of the masses and this has hardly happened. It is true that in countries which have been hit by economic crisis, Bitcoin has seen a wider adoption but even their alternative fiat currencies have seen a bigger surge.

As Vox reports on the Venezuelan crisis:

“Bitcoin is far less significant than conventional cash. There is more than $1 trillion in $100 bills in circulation, and a large fraction of that cash is used for illicit activities. The Bitcoins in circulation, in contrast, are only worth about $10 bln.”

There just doesn’t seem to be any rush in the Bitcoin community to get the cryptocurrency mainstream. The people who do buy Bitcoin mostly tend to hoard it as ‘digital gold,’ which is all very good but it doesn’t bode well in terms of Bitcoin as a currency.

From personal experience, I live in a city of nearly 2 mln people in North India and even after demonetization, which would present an excellent opportunity for Bitcoin, I have never seen anyone transact in Bitcoin. Instead, we have seen operators of typical wallets like PayTM in India take advantage of their network on the ground to push their product.

Stop preaching and start acting

It is time that Bitcoin companies and supporters abandoned their ideological agenda and work with the currency itself. If Bitcoin has to survive, we need everyone to adopt the digital money for what it is - money.

There is no shade or shape to it. We need more than wallets. We need Bitcoin in every pocket and the only way to do it would be to solve the existential crisis that Bitcoin faces in terms of the sludge in the pipelines.

Transactions need to be faster, quicker and we need consensus on the future of the currency. We also need more people on the ground actually accepting Bitcoin and that needs a real network instead of an ideological one.

Creating Bitcoin acceptance means working with people who you don’t necessarily agree with and the way to get along with them - stop preaching and start acting. 

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