It’s over; it’s all over. Drop every bag you’re holding, capitulate, and sell. Both the group of seven (G7) and the Bank of International Settlements (BIS) have decreed, in all their wisdom, that bitcoin has failed.
A report on stablecoins from G7 and the BIS – also known as the the bank to rule all banks – is an unsurprisingly morose read. While regarding stablecoins as material for mass adoption, bitcoin received much more limited praise. The research relays – within the introduction no less – that BTC and other cryptocurrencies had “so far failed to provide a reliable and attractive means of payment or store of value.” The report elaborates by citing the exaggerated rhetoric of bitcoin’s scalability issues, and of course, everyone’s favorite, the scope for illicit activity.
For BTC, this report is relatively inconsequential; in reality, it marks the 378th time bitcoin has been declared ‘dead’ or something similarly as awful. Of course, some points aren’t entirely unjustified, but the hyperbolic statement that BTC has failed borders on delusion; here’s why.
First, let’s look at the basics. In the decade since it’s inaugural minting, BTC has gained a monumental 9,874,900%. From the first known price of approximately $0.08 over a decade ago to its current price of (around) $7,900, BTC has exhibited more growth than it’s quasi-counterpart, gold, has managed in over 100 years; all despite currently citing a 60% decline from its all-time high.
Moreover, this is a trend that looks set to continue. Looking at bitcoin’s year on year gains, we can see it has consistently grown regardless of a myriad of ‘burst bubbles.’ This is pretty well evidenced by looking at bitcoin’s yearly lows. After nearly every parabolic movement and subsequent retrace, bitcoin’s price has stabilized well above its previous yearly low.
Furthermore, in spite of the report’s claim to the contrary, it would appear that bitcoin is gaining traction as a macro hedge. This isn’t merely sentiment, either, according to research from Grayscale Investments. The investment firm shows that rising geopolitical tensions are having a direct and positive impact on bitcoin’s price action. A prime example of this was seen following Trump’s tariff increase on Chinese imports back in May, in which BTC cited a significant gain over contemporary safe havens such as gold and the Japanese Yen.
But it’s not all about the gains. While scalability issues persist as the Achilles’ heel of the crypto industry, there are several ongoing fixes both for bitcoin and other contemporary cryptocurrencies. One such BTC-specific fix is the Lightning Network, a second-layer protocol looking to lighten bitcoin’s transaction load. Presently, the nuts and bolts of the network are still being worked out; still, with nearly 6,000 active nodes, it’s a significant step in the right direction.
Finally, the go-to argument for every crypto adversary – the ability to use bitcoin for illicit activities – which arguably, and somewhat ironically, sees it used as a form of payment. So, which is it? The same critics argue that bitcoin cannot be used as a reliable payment method, yet they rely on the exaggerated claim that it is a sound payment option for dark web criminals.
Who’s a failure now, ay?
It’s undeniable that BTC and many other cryptocurrencies are used for illegal acts, be it buying narcotics, hiring a hitman, or any other nefarious deed. Nonetheless, this isn’t restricted to bitcoin alone. A panel held by the U.S. Senate Judiciary on the issue back in 2018 found that compared to the volume of illicit activities via traditional financial services, crypto was but a drop in the water.
Unfortunately, despite the economic subversion it allows within tyrannical regimes, as well as the many assurances it affords those within countries with a dying currency, bitcoin is still tarnished by its vague connection to the underworld.
All in all, it seems G7 and the BIS may want to go back to the drawing board with this one.
Last modified: March 4, 2021 2:41 PM