The first mention of Bitcoin appeared online a decade ago this week, admittedly without much fanfare. A technical paper describing a new “electronic cash system” was sent around an obscure internet mailing list for cryptography nerds.
Its author, who went by the name Satoshi Nakamoto, detailed how the system would mean online payments being sent directly between people, without having to rely on a bank. It was unveiled without much bombast, and seemed like more of an experiment than a revolution.
A few months later, the Bitcoin network went online. Embedded in the code was a newspaper article about Alistair Darling, then the chancellor, preparing a new bank bailout (one of several reasons some believe the pseudonymous Nakamoto was British).
In the decade since, Bitcoin has been met with a combination of fascination, fervent excitement and deep scepticism. It has been called the end of money as we know it, hailed as a new gold for the digital world, and feared as the fuel for a new digital anarchy.
It has been through multiple boom and bust cycles. An early crash in 2011 saw Bitcoin’s price fall from $30 to $2. Last year, it peaked at almost $20,000, making all the Bitcoins in the world worth more than $300bn.
The internet currency turned many of those who found out about it early into millionaires. It also created two ideas that some believe rank as the greatest inventions of this century: cryptocurrencies, of which Bitcoin is only one, and blockchain, the record-keeping technology that underpins it.
The appeal of both is that information of any kind could be stored and moved without having to rely on any central party or institution. In the case of money, when we make a card payment, a bank or credit card company typically takes a fee. Globally, these fees add up to billions each year.
But with cryptocurrencies, there is no such greedy payments provider. The system is “decentralised”: transactions are signed off and recorded by those who use the network. The people have the power.
The blockchain, the technology that underpins it, has been heralded as a new kind of information system, impervious to fraud and cyber attacks, and one whose potential uses extend well beyond cryptocurrencies.
In the same way that the road system was developed for journeys on horseback, but became many times more useful once cars came along, the blockchain supposedly has applications well beyond money.
Philip Hammond, the chancellor, recently proposed it as the solution to the Irish border problem. Lawyers are wondering if it will make them obsolete, through the introduction of “smart contracts” that run on the technology. You name it, they can blockchain it.
That is the idea, at least. The reality is that 10 years after the idea for Bitcoin and the blockchain came online, it still feels like a solution searching for a problem. Billions of venture capital funding has been put into cryptocurrency and blockchain start-ups, but as of yet, there seems to be little to show for it. Few of us are using cryptocurrencies to make payments.
The handful of real-world applications of blockchain that do exist - a tracking system for shipping containers, settlements on the Australian stock exchange - seem more grounded in flashy marketing than actual benefits.
When interest in the technology spiked last year, it was almost entirely to do with Bitcoin’s price: there was little interest in using the cryptocurrency as first intended, and lots of interest in getting rich quickly.
Ask somebody who works in the industry about this, and they will tell you to be patient. They will tell you that cryptocurrencies and blockchain represent an idea as profound as the internet itself, and one so powerful that it will inevitably take hold eventually. Miss out, and you miss out on the future.
But something can’t be the future indefinitely. At some point, a technology has to start being used. Otherwise it is simply a failed promise. And Bitcoin is starting to look like just that. A decade after it was invented, it has gained no traction as a form of payment. Nor have the thousands of other cryptocurrencies that have taken its place. Instead, it has served as a wild form of gambling. As for the blockchain, nobody seems to be using it for anything other than experiments and publicity stunts.
Technologies do take time to catch on. The first email was sent in the early 1970s but it took more than two decades for us to be sending missives to each other several times a day.
But just as often, things fail to catch on not because the world isn’t ready for them, but because they are bad ideas.
Internet money may well be one of these ideas. Generally, our payment systems work. We can rely on our banks to hold our money. Few of us are paranoid enough to want to rip up the system. It is easier, generally, to rely on someone else.
The world wide web was also founded on democratic, grassroots, ideals, but has come to be dominated by massive companies. Decentralisation, it seems, is perhaps not as powerful a force as its backers had hoped.
Bitcoin and the blockchain have been presented as the future for a decade now. Time is running out for that prediction to come true.
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