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January 3, 2016 10:10 PM UTC

Mainstream Media’s Take: Strong Momentum For Bitcoin And Blockchain In 2016

The final week of 2015 brought exciting indicators for bitcoin and the blockchain heading into 2016. Price stabilization, venture capital investment, financial institutions’ investment and bitcoin's ability to enhance cross-border payments all paint a positive future for the new year, despite the challenges of cryptocurrency’s association…

The final week of 2015 brought exciting indicators for bitcoin and the blockchain heading into 2016. Price stabilization, venture capital investment, financial institutions’ investment and bitcoin’s ability to enhance cross-border payments all paint a positive future for the new year, despite the challenges of cryptocurrency’s association with illegal activity and the uncertain impact of regulatory initiatives.

Another positive sign was the increasing attention from major financial media such as Forbes, Fortune and The Wall Street Journal.

Fortune carried a feature summarizing both the positive and negative indicators and concluded the positives outweighed the negatives heading into 2016.

Bitcoin Challenges Continue

On the negative side, Fortune noted that illegal activity continues to undermine the development of digital currency. In early December, the Securities and Exchange Commission (SEC) charged mining companies owned by Joshua Garza – ZenMiner and GAW Miners – with operating a Ponzi scheme. Garza, the SEC claims, earned $20 million selling shares in “hashlets.”

Illegal activity even afflicted an organization formed to promote bitcoin, the Bitcoin Foundation. Near the end of 2015, the foundation reported criminal investigations of ex-board members were one of the reasons it needed to change its board and reassess its mission. Other foundation problems cited were declining finances and the ramifications of some poor management decisions.

Jerry Brito, executive director of Coin Center, in March told Fortune that bitcoin remains associated with criminality.

While bitcoin is a “neutral” technology, this fact remains lost on the average person.


Peter Van Valkenburgh, Coin Center’s research director, said newspapers seize on the bad news and ignore positive aspects like the amount of venture capital invested in bitcoin and its technological possibilities.

Another challenge, according to Fortune, is there is no “killer app” for bitcoin. Most people don’t understand why they should pay for something using bitcoins. The cryptocurrency’s biggest appeal at present is for remittances, whereby someone sends funds in bitcoin to circumvent fees and the typical transfer time. But this need does not exist for most Americans.

Still another challenge is the closing of bitcoin startups due to regulatory changes. The New York BitLicense in August caused more than 10 bitcoin startups to leave the state. They did this either by halting service to the state or relocating headquarters from the state. At least 11 bitcoin companies closed in 2015 due to either financial failings or legal issues.

Positives Outweigh Negatives

On the positive side, Fortune cited several indicators.

One is stability. As a commodity, bitcoin demonstrated more stability in 2015 than in the past. Bitcoin’s price ranged between $200 and $300 in the first nine months of the year. It topped $300 in July and October, then peaked at $500 briefly in November before falling back to the high $300s. It has risen steadily in the last two months and has remained in the low $400s.

The best news in 2015 focused on the blockchain, the distributed public ledger that records all bitcoin transactions. The blockchain became “the” buzzword in financial technology in 2015 as financial institutions including the New York Stock Exchange, Goldman Sachs, JPMorgan, American Express, Via and MasterCard announced interest in the blockchain. On Dec. 30, Nasdaq completed the first stock transaction documented with blockchain technology.

The interest in blockchain has been cited as a reaction against bitcoin.

Ryan Selkis of the Digital Currency Group tweeted that blockchain is friendlier to business while bitcoin suggests delusion and obsession.

Those touting the blockchain without bitcoin fail to realize one is needed for the other to exist, several observers noted. Bitcoin rewards miners as they add bitcoin transactions to the blockchain. A blockchain-like public ledgers could have applications in some business areas, but the bitcoin blockchain requires bitcoin.

John Evans, a software engineer writing in TechCrunch, said the positive references to blockchain coupled with negative ones for bitcoin are surreal. He said a blockchain in itself is not revolutionary. He posited that bitcoin is to financial services blockchains what the Internet was to corporate intranets 20 years ago.

According to Evans, bitcoin is valuable for the same reason that gold is. Gold is hard to counterfeit, scarce, and easy to transport, subdivide, merge and refine. These are the attributes that make gold an effective exchange medium, store of value, and unit of monetary account. Bitcoin, Evans notes, meets these criteria “in spades.”


People do not easily grasp bitcoin’s significance, Evans observed. One reason is most people do not yet need what he considers bitcoin’s most interesting and original aspect: “smart contracts.” The only reason for “ordinary” people to use bitcoin in daily life is if their national currency has betrayed them.

Relevance To ‘Ordinary’ People?

Bitcoin is, nonetheless, poised to become relevant to ordinary people, Evans said. This is because transferring money across national borders with traditional currency requires paying a fee and incurring an exchange rate and it takes a long time. In addition, many people cannot use debit cards in other nations. Many in the developing world find they need to change money on the black market, face export controls or experience the impact of hyperinflation.

People can immunize themselves from these problems, Evans said, with gold and increasingly with bitcoin. Bitcoin, for its part, can allow cross-border transactions quickly and without intermediaries.

The financial industry might create a strong blockchain app, Evans said, but doing so seems to ignore the fact that such an app already exists that has created $6 billion in value “out of nothing.” Evans concluded that big-bank and corporate consortium blockchain initiatives or other applications using a particular data structure do not interest him.

Instead, he is interested in applications that expect ordinary people to sue bitcoin. He cites applications such as Freemit, Align Commerce and Blockstream.

Venture Capital Investment Soars

Expanding venture capital investment in bitcoin was another positive indicator in 2015. Bitcoin companies raised $485 million in 2015, compared to $315 million in 2014, which was three times the number in 2013. Recipients included 21 Inc. ($116 million), Circle ($50 million), Chain ($30 million)and itBit ($25 million).

The end of 2015 brought indication that smaller countries with innovative tech startups could play an important role in bitcoin’s development.

Also read: 2015 Year In Review: A banner year for bitcoin and the blockchain

Lithuania Is Looking at Bitcoin and Blockchain Technology

Forbes highlighted recent developments in Lithuania in an article about bitcoin’s benefits over traditional currencies. The fact that Lithuania is a small country can be an advantage since implementing new technologies can be less costly and faster.

Traditional currencies are not compatible with fast-changing IT innovations, nor are they secure. It is easy for hackers to get peoples’ credit card information, considering any restaurant waitress can photograph a customer’s credit card, Forbes noted.


As for the concern about bitcoins being associated with illegal activity, Ilja Laurs, founder of the Vilnius, Lithuania-based Nextury Ventures venture capital fund, said the same can be said about email. Laurs claimed bitcoins are more secure than email accounts and bring promise as a currency.

While illegal business owners were first to recognize bitcoins’ benefits, Laurs said legitimate businesses can use cryptocurrency to their advantage. Lithuania, he said, needs to learn from Korea and Japan, countries that use technology to help their economies.

Lithuania should focus on certain verticals rather than investing in too many fields simultaneously, Laurs said. The government should consider its options and select those that have a greater chance to succeed. He said the banking sector has a lot to offer, given the infrastructure and the fact that major players lie Barclays and Danske Bank are opening offices.

Marius Skarupskas, Lithuania’s vice minister of economy, said Lithuania in general and Vilnius, in particular, are emerging as a center of financial innovation. He said Lithuania’s research and development sector has also secured investment from remittance operators such as Western Union.

The Bitcoin Conference 2016 will be held in Vilnius April 8 in association with the Vilnius City Municipality, the largest cryptocurrency conference among Baltic states.

Images from Shutterstock.

Last modified: January 25, 2020 11:16 PM UTC

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