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 Get quotes by email 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.
I first became interested in digital currency during the mid-1990s, when I met a genius cryptographer and mathematician named 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 genius. He His company DigiCash was founded five years before either the creation or acquisition of either. NetscapeThe browser was popularized by, Amazon. By 1998: DigiCash went bankrupt.
What Then came the short-lived “information wants to be free” era. NapsterThe company was founded in 1999 and used peer-to-peer technology which allowed music lovers to illegally download songs. 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 This was a real commercial barrier: whenever you wanted to purchase something, you had to fill in your credit card information plus your billing address. If it was different, you also had to fill in your shipping address. And Once you have done that, hackers would have access to your information. Electronic Both of these problems could have been solved with 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 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 essentially accessed the bank or credit card account of the user to make purchases and send money. Apple And Amazon It has also been much easier to pay for items; when I want my monthly expenses to be paid for, it is so easy. Washington Post Subscription, I hit “Amazon Pay” button and it’s done. Even So, when we shop online, we still spend a lot of time filling in credit card information.
MeanwhileEvery attempt to create an electronic currency failed. One I remember was called Qpass Another is called WebPay. In In the early 2000s, egold was seen as a possible solution. But it was used primarily for criminal purposes. In 2008, its founder pleaded guilty for money laundering.
According to the website 99bitcoins.comThere are 89 companies that claim to accept bitcoin as currency, including Subway, the Massachusetts Institute This is Technology bookstore, and Museum 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 accept bitcoin when it could fall by $500 in 10 minutes?
Whatever Bitcoin was originally intended to be a speculation asset. “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.
OrThat is not the case. The Another flaw is the very thing that many of its adherents love about it: 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 see bitcoin being traded even after the bubble bursts. Maybe A few other cryptocurrencies may follow similar trajectories, but most will eventually dissolve into nothingness. It can be seen as reflecting the larger economy in some manner, rising in certain environments and plummeting in others. In Bitcoin could be seen as the digital equivalent to gold in the best of cases.
There’s nothing wrong with that. But we’ll have to wait a little longer for an electronic currency that works.