Over the weekend, I ran across a link to a Sputnik International opinion piece about Bitcoin called “Five Reasons the Bitcoin Revolution is over.” Never heard of Sputnik International before (it’s a multinational media corp that was just created last November). And this article doesn’t seem well-received, with eighty-nine “thumbs down” to just nine “thumbs up”.
Maybe the author or the company, is jumping on Bitcoin to get the ball rolling on their fledgling media enterprise. Maybe they have an agenda against Bitcoin, or they have knuckled under to a centralized third-party or government entity. Nevertheless, whether it is worthy of a rebuttal, which it really isn’t, I look to dispel these five myths and any negative undercurrent of sentiment against Bitcoin. It is best not to let such targeted mainstream agendas fester unchecked. Like cancer, it’s best to get it early.
The State of the Bitcoin Revolution: You decide
It is interesting their take on “Opinion”, where the author, Andre Alessandro, gets to state his opinion, but the reader does not have any commentary space below the article. How very statist of you.
I’ll lay out the anti-Bitcoin position taken by the Alessandro, and I’ll present the pro-Bitcoin side, and let the public decide for themselves where thing stand. Feel free to comment below this article. We’re not afraid of your opinion, or you opinion of this article. Ready?
“Price – Since Bitcoin has no underlying value, the decline is equitable to a loss of its confidence and popularity. Quite simply, the only people holding bitcoin today are those who purchased bitcoins at the top and are waiting to recoup their investment or diehards who believe that Bitcoin will one day succeed.”
Bitcoin price, as I’ve shown before, is only one metric of Bitcoin popularity, market demand, or any other connotation you’d like to use to gauge interest. The price before the fall of Mt. Gox, and as it entered the Chinese market for the first time, was obviously a massive bubble. Bitcoin was still up over $100 versus its position two years ago.
Regarding its popularity, while the Bitcoin price was dropping throughout 2014, Bitcoin transactions increased on a consistent basis all year long and are now back at their peak all-time levels of late 2013. This easily dispels the lack of popularity argument. People use it now more than ever. And the rapid increase in venture capital in 2014 and 2015 should also be ignored?
Price is definitely down, but a lower price also makes entry into the market much easier for new investors. If the price moved from $1000 in 2013 to $2-3000 today, how many people would really be able to enter the market at those prices? Meanwhile, how many media pundits would be screaming “Bubble” every day, almost wishing for a market correction? The mainstream media would rail against Bitcoin either way.
“Mining Is Becoming Less Profitable – The price decline has also led to a serious blow to its production or “mining.” This is the underlying process by which Bitcoin creates new coins and determines the validity of all Bitcoin transactions.”
There are specks of truth in this, as a number of mining operations have gone under in news reports. Also, many of those started their operations when Bitcoin was a $700-1000 product. When you start there, and value drops all year, you aren’t trained in how to run a mining operation at more realistic market levels. The miners who were successful when the Bitcoin price was $100-150 two years ago are still around. Those short-term players fade, and only the strong survive. If you were mining two years ago, when Bitcoin sold for much less than it does today, you would know how to make money during bubbles and after a market correction.
Miners, by and large, aren’t going anywhere. Mining is not for newbies or people out for a quick hit. Only the strong survive, and this ride has made them stronger in the long-run. Those who win the war of attrition can succeed beyond their wildest dreams, as can anyone who sticks with any worthwhile business endeavor.
“No Consumer Protection – The biggest reason Bitcoin will never take hold is because there is no insurance against theft, loss or even if you send your coins to the wrong person. Once the coins leave your account, you have no more claim to them.”
He assumes that this is the biggest issue facing Bitcoin and that it can’t be overcome as Bitcoin evolves. If the Bitcoin technology never grows from now on, and we still send public keys instead of a less onerous transaction code, he may have a point here. Where he sees a flaw, I see a billion-dollar opportunity for an entrepreneur to improve Bitcoin. Over the coming years, we won’t use a mess of characters to send funds to each other, just like we do not use computer IP addresses anymore. A fair point, but by no means a death sentence for Bitcoin. It’s an opportunity.
“Low Adoption Rates – The goal to have every merchant accept Bitcoin as payment is a lofty dream, but the reality is, that many businesses are not considering adopting Bitcoin in the near future.”
And the reality is many businesses are. Just in the last two months, Microsoft and CNN have joined the fold, as the number of merchants has passed 100k worldwide. He also compares it to Apple Pay, threatening that 38% of large retailers will accept it by the end of the year, according to Apple. Plenty of large retailers have passed on it already, including Wal-Mart. Outside of the cabal of usual suspects who came up with that plan, adoption has been slower than they expected. Bitcoin has been on a consistent rise worldwide. You can’t use Apple Pay in this argument and have any credibility.
“Bitcoin is a Passing Trend – Bitcoin will fail, not for fans lack of trying, but rather its status will never be more than an interesting concept championed by those in the techie or libertarian camp. Holding Bitcoin is more of a political expression rather than a sound economic investment.”
If new technology is “a passing trend”, that would make sense, but history does not support his argument. This was a common refrain twenty years ago when the Internet started to gain market traction. The Internet was just a toy for nerds to send messages. How did that turn out? He didn’t jump on that bandwagon? He didn’t rail against that?
In a global society that has gravitated to every new tech product from the Game Boy to the Apple Watch, Bitcoin hasn’t been a hit? The facts don’t support your argument. Five years ago, it was that nerdy tech toy nobody used. It has since gone global, and governments are holding meetings every day on how to deal with Bitcoin.
Bitcoin is not just a currency, but a new technology that spans the globe, and helps improve many current centralized systems that need upgrading or replacing. It’s not here to be quickly adopted, or as some quick fix. That’s it’s the greatest strength. It is a bevy of technological apps, and its currency is just the first of many to come. It is here to change, and improve, many mainstream protocols we use today, but could be much better with the Bitcoin technology.
Did you know that there are 1.5 million new smartphones bought every day, worldwide? And that was two years ago! Isn’t Bitcoin a perfect fit for this technology? There are more smartphones in the world than people who own a toothbrush! Whether it’s now or 10 years from now, Bitcoin information, or currency, will be sent globally, in seconds, on a mass scale. It’s only a matter of when. Just like the collapse of the US Dollar is fait accompli. The only question is when will it happen. They seem to have an inverse relationship. As one obsolete form of fiat currency fails, a new digital technology rises to replace it, in The Technology Age. Bitcoin was only a few cents five years ago, traded between Satoshi Nakamoto and Hal Finney. Now it’s worth hundreds of dollars and is traded on global exchanges. Critics like to ignore these facts.
The Internet started to gain popularity primarily based upon its ability to send an email, but we’ve all learned it was far more than just a digital message service. Bitcoin is the son of the Internet, and will show naysayers things they’ve never seen before, and will use in their future if they’re smart. Comparing Bitcoin to a US Dollar is like comparing the Internet to a mailed letter. One is the standard, and one in the future. Since I don’t have any plans on going anywhere for the next thirty or forty years, I’ll bet on technology’s future, over obsolete centralized 20th-century systems.
Maybe Mr. Alessandro still hand-writes letters and mails them, but history charts a course forward that his argument just doesn’t comprehend. He should get a job at the U.S. Post Office, and see where that takes him in five to ten years. Everything in this world is changing based on new technologies, and Bitcoin will be at the heart of this brave new world. It is changing things right now. He doesn’t see it because he chooses not to. He doesn’t see the forest through the trees.
Images from Shutterstock and Blockchain.info