Not because I missed the great run-up (though I did) and not because I fear that the bitcoin bubble will end badly (it will, but that’s not my problem). Rather, it is because I have been waiting for decades for someone to invent a purely digital currency, a currency for online purchases that wasn’t linked to a credit card. It This was the killer app that no one has ever discovered.
Thus When bitcoin first appeared, I hoped it would be. The One. In “Digital Gold,” his book about bitcoin’s origins, Nathaniel Popper Emails with quotes Satoshi Nakamoto, the cryptocurrency’s mysterious and possibly apocryphal inventor, “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”
That’s how all the early bitcoin enthusiasts thought of it a currency, one that allowed consumers to buy things.
That’s how all the early bitcoin enthusiasts thought of it — a currency, one that allowed consumers to buy things while sidestepping both the banking system and national governments. What However, the bitcoin bubble shows that bitcoin is yet another ecurrency failure. But I’m getting ahead of myself.
When I met a genius cryptographer and mathematician named “Alison”, I began to think about digital currency for the first time in the mid-1990s. David ChaumHe had invented electronic cash, or ecash. It did exactly what bitcoin purports to do — allow people to use virtual money, stored on their computer, to make purchases and send money to other people.
Chaum He was a man who was far ahead of his time. He Five years before the creations of either, he founded DigiCash, his company. NetscapeThe browser was popularized by, Amazon. By 1998 DigiCash went bankrupt.
What Then followed the short-lived “information wants to be free” era. NapsterFounded in 1999,, a peer-to-peer platform allowed music lovers to illegally download music. Newspapers didn’t have paywalls, and many people came to assume that news shouldn’t cost anything. I saw my own children downloading music and even movies, and when I would tell them they were violating the law, they would tell me I didn’t understand how the world worked in the internet age.
As E-commerce became a reality, and the only method of payment was a creditcard.
As E-commerce became a reality, and the only method of payment was a creditcard. It It was a real commercial friction point. Every time you wanted something to be purchased, you had your credit card information and your billing address. And, if necessary, your shipping address. And Once you have done that, hackers would have access to your information. Electronic These problems could have been solved by currency. If my children had access to a digital currency — maybe their allowance! — Napster They could have reached deals with record companies to charge for songs. They I would happily pay. And E-cash would have made internet commerce almost frictionless. By 2000, the chief executive officer of an internet bank was speaking. “We’ve reached the point where the internet economy needs e-cash.”
It It has never happened. InsteadEntrepreneurs and companies came up with a variety of workarounds that worked, some better than others. The The most well-known was PayPal, which basically accessed your bank account or credit card account to make payments or send money. Apple And Amazon It is much easier to purchase things. Washington Post Subscription, I hit “Amazon Pay” button and it’s done. Even Even so, it is still a time-consuming task to fill out credit card information online when we want something.
MeanwhileEvery attempt to create an electronic currency failed. I can recall one called Qpass And another called WebPay. In E-gold was a promising solution in the 2000s. However, it was primarily used by criminals. In 2008, its founder pleaded guilty money laundering.
According to the website 99bitcoins.comThere are 89 companies that claim to accept bitcoin as currency, including Subway, the Massachusetts Institute Of Technology bookstore, and the Museum You can find the Coastal Bend In Victoria, Texas. But I can’t imagine anyone actually using it to pay for something. Who Would you use bitcoin to make a purchase if it could go up $500 in the next 10 mins? And Who would want to accept bitcoin when it could drop by $500 in the next 10 seconds?
Whatever Bitcoin, despite its original purpose, has become an asset that is only used for speculation. “There is simply no way to predict what it will be worth,” Pete Kight, “fintech” (Financial technology) Investor who founded Checkfree 1981 That Its fatal flaw is that it is an electronic currency.
OrIt is, in fact, one of them. The The other flaw of the system is its very essence, which many people love. It operates separately from the government’s fiat currency. “I call it the tyranny of brilliance,” Kight. “When you work in fintech, you often see engineering genius get out of synch with what works in the real world.”
In He spoke out about bitcoin as follows: “There is this thing called the Federal Reserve. Its first job is to protect the financial system of the United States. For a cryptocurrency to be successful, it has to work out with the Fed how it won’t undermine the banking system.”
I can only imagine that bitcoin will continue trading after the bubble bursts. Maybe A few other cryptocurrencies will follow similar paths, though most will disappear into nothingness. It can be seen as reflecting the larger economy in some manner, rising in certain environments and plummeting in others. In In the best case scenario, bitcoin could be considered the digital equivalent to gold.
There’s nothing wrong with that. But we’ll have to wait a little longer for an electronic currency that works.