Bitcoin: Merging with the mainstream?

At first glance Bitcoin appears under siege. Most days another scare story emerges. Yet behind the headlines, cryptocurrency is gaining ground.

Nothing new develops without glitches. Some poor souls in Australia are lighter of (virtual) wallet due to a new era banking heist (the digital equivalent of raiding safe deposit boxes while the bank was shut). Meanwhile some academics tried to suggest there was a huge flaw making Bitcoin innately unstable. That’s just a couple of the key stories in the media this past week…

...while Bitcoin itself reached record highs.

Those sensitized to bubbles will be clearly worried that perhaps we are looking at one of those crazed moments in human history where Bitcoin is the new tulip bulb. Indeed, all new technologies tend to be surrounded by huge dollops of hype and hubris. Usually they inflate bubbles before achieving acceptance. “Dotcom” did that a decade back... but who can imagine functioning without the internet today? Thus have society and markets integrated technology and innovations for centuries.

In the mainstream media, it is common to denigrate BTC. Any untoward act is used as a cudgel to beat the currency. Thus Silk Road was seen as dangerous because Bitcoin was used for transactions. Similarly Cryptolocker “ransomware” virus encrypts files, demanding Bitcoin as payment. However does being a conduit used for crime actually reflect the currency itself? Consider the dollar: will the Federal Reserve shut itself down given that it issues anonymous ‘greenback’ bearer bonds, which are the favored currency of the world’s drug dealers, pirates and people traffickers? I doubt it.

Despite the doomsayers, Bitcoin is growing in popularity. Recently Chinese buyers have joined a growing army of investors as the cryptocurrency bandwagon gains pace world-wide. No matter how many negatives are thrown at Bitcoin, one clear conclusion can be summarized in Friedrich Nietzsche’s maxim: “That which does not kill me makes me stronger.”

Examine the scaremongering and there tends to be two types of people: those with a vested interest and those who without thinking defer to the status quo. Behind the negative headlines, even central bankers are increasingly fascinated by Bitcoin as recent Federal Reserve studies (amongst others) show.

Some months back, I dubbed Bitcoin a Copernican Revolution in finance. It isn’t the perfect money, nor is it the total solution to central banking failures, but it is absolutely a key first step to the new financial universe. Where earlier digital currencies such as Beenz failed, Bitcoin has successfully built a whole new decentralized infrastructure for financial transactions. Some criminals may seek to exploit it but the overall effect is an incredible force for good: citizens are no longer prisoners of corrupt or incompetent governments. 

Indeed, virtual wallets can be stolen. However, it is more difficult than swiping an unattended handbag. Yes, Bitcoin remains as volatile as a teenager coming to terms with the power of their hormones. However, damning Bitcoin is like seeking to ban the automobile just because the Ford Model T was not always reliable and led to a rise in people injured in road accidents. The car democratized individual travel in a way unlike any other innovation, but clearly it was a journey which has involved pain and compromise. Similarly Bitcoin decentralizes money which terrifies the control freaks of government who want to have influence over citizens’ every movement.

Right now Bitcoin is still small with a billion or so dollars in BTCs outstanding, compared with 1,200 billion circulating in US currency. However legitimate Bitcoin commerce is growing rapidly as more cafes, bars and stores begin accepting Bitcoins. The Vancouver ATM is the first of many. There may be some more regulation ahead but ultimately cryptocurrency will not be a captive of the rapacious crypto-collectivist bank-government corporatist catastrophe. Whichever party seeks to control you, Bitcoin can help keep your savings free!

Just as the internet has freed information flows with significant impacts on totalitarian governments, so too, Bitcoin is the agent for freedom of cash. There are many vested interests that are fearful they may lose influence over the brave new world of money as we enter a post-Copernican financial age.  Nietzsche was pertinent here too. His point that strength grew from challenge was written in his magnum opus, “Twilight of the Idols”. In the case of Bitcoin, the idols are clearly governments and the established banking system. Cryptocurrency levels the playing field for money back to the individual. No wonder so many are keen to dismiss it.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.