People should know better by now that to judge the future of
Bitcoin or cryptocurrencies in general on what is happening today,
or this week, or any arbitrary but short time period. Yet, just
like with the initial collapse of Silk Road late last year–where
“everyone knew” all Bitcoins were spent and yet whose death seemed
to spur an enormous rise in Bitcoin market value–so is the
collapse and disappearance of prominent Bitcoin exchange Mt.
Gox, with lots of people likely losing lots of money, you are
hearing the Bitcoin is over.
Bitcoin may indeed someday be over, though the enormous
advantages of its protocol for many of the things people want out
of money (and other things, as Jerry Brito explained
in the December Reason) make me think that’s an
unlikely bet. But past results are no performance of
future guarantees, or whatever it is they say in the world of High
Finance.
This article from
Businessweek has some nice perspective on why Bitcoin
believers aren’t ready to give up yet:
Some bitcoin believers are cheering the development, hailing it
as the end of amateur hour for the crypto-currency. “It purges the
final vestige of the first generation of infrastructure companies,”
says Jerry Brito, director of the technology research program
at Mercatus Center at George Mason University and a longtime
proponent of bitcoin. “Who’s left? It’s the serious people,
who are doing this right.”Those people are working hard to assure the market that they
are, in fact, serious. Several prominent bitcoin companies
signed on to a statement vowing
to shore up the credibility of the
currency. The companies describe the need for bitcoin
companies to submit to independent audits, balance sheet
requirements, customer disclosures, and policies that don’t allow
companies to leverage customer assets for their own trading.
And as you
read people telling
you it’s
all over, it helps to remember that the
price in dollars of Bitcoin as of around right now–around
$520, after a dip to below $460–is a low not seen since, wow,
mid-November, slightly more than three months ago.
A reminder: if you had invested $1,000 in the horrible mistake
of Bitcoin five months ago, that thousand would be worth about four
times that today. After this Mt. Gox news.
Certainly, that huge value increase is not proof of Bitcoin’s
eternal value as either investment or currency (and inflation in
the former isn’t that healthy for use as the latter). But it is a
sign that “it’s over, man” seems doubtful. People still believe.
And that’s important when it comes to either investment or
currency.
Some bonus Bitcoin science from September: why it
isn’t that easy for the protocol and blockchain to trace or
block stolen coins.
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