Does it matter that bitcoin's lost its way?
Over the past two weeks, I've sat down in front of computer screen a number of times to complete a coherent opinion on bitcoin's status in 2018.
Believe it or not, it's difficult to do.
That shouldn't be a surprise because the volatility of cryptocurrencies makes it challenging to write coherently about them. The cryptocurrency market fluctuates by the minute.
And that is the result of cryptocurrencies' status as an asset these days instead of existing as its original intent: an alternative to the current payments system.
How did this happen? Blame the middlemen, and maybe bitcoin's creator.
Last month, I posted a question on Twitter: where is Satoshi Nakamoto?
Where is he? Or she? Or them? (No one really knows if Nakamoto is one person or several people.)
And the reason I asked that question is simple: what does Nakamoto think about what his creation — bitcoin — has become almost 10 years after he published a white paper that is now a fairytale about the cryptocurrency's original intent?
I can't imagine he's thrilled.
Bitcoin was supposed to be an alternative to the modern banking and payments system. The aforementioned paper is titled "Bitcoin: A Peer-to-Peer Electronic Cash System." Let that sink in for a moment.
Today, and for much of 2017, bitcoin and its brothers, such as Litecoin, have become part of a system they were meant to counteract.
But good luck finding anyone these days who cares about bitcoin's original purpose. Most people are too busy on Coinbase checking bitcoin's day-to-day value.
Another question I find myself asking is whether any of this even matters at the end of the day.
When I first stumbled upon bitcoin in 2013 (yes, five years after the white paper was published) as the content manager for Payments Journal at Mercator Advisory Group, we, as a company, didn't know what to make of it or how to classify it.
Bitcoin certainly fell under the emerging technology practice at Mercator, but outside of that, much was unknown about it.
So, I began to take a deeper dive into it and liked what I found. The idea of a system that eliminated the middleman and promised near anonymity on purchases played to the libertarian ideas that I had adopted over the years.
But then reality set it. I thought there was no way bitcoin would replace the system we have in place today. I believed governments would never allow that to happen, and the idea that you could walk into a Starbucks and use bitcoin to pay for a coffee seemed ludicrous.
Here we are 10 years later, and bitcoin as a widespread transaction method appears more behind than ever.
Of course, I'm not the first person to highlight what has essentially been bitcoin's demise as an alternative to the current payments system.
Adrianne Jeffries at The Outline wrote a wonderful piece late last year about this very issue.
She wrote the article right after bitcoin went through another one of its many value fluctuations. Jeffries noted how Coinbase, a great example of the middlemen Nakamoto warned against, showed errors in its app due to high traffic. In other words, people were cashing in on bitcoin's rising value at that moment, and Coinbase couldn't handle the rush.
Jeffries neatly captured bitcoin's current status in two lines:
Nakamoto was a libertarian who wanted to create a system for payments that would circumvent governments, bankers, and corporations. Instead, Bitcoin is now a get-rich-quick scheme that retains none of the exciting, anarchist features it proposed and has created a secondary economy with financial shenanigans that mirror the ones that led to the global financial crisis.
Can bitcoin ever recapture those anarchist features? It seems highly unlikely at this point.
When payments processor Stripe announced last month that it would no longer process bitcoin transactions come April, it was a sign that at least that cryptocurrency was no longer a viable transaction method.
"Over the past year or two, as block size limits have been reached, bitcoin has evolved to become better-suited to being an asset than being a means of exchange," Stripe's Tom Karlohe said at the time.
Rising transaction costs was one of the issues Karlohe cited for Stripe's decision. Bitcoin transactions went from pennies to process to as much as $40. Those prices harken back to processing costs of direct carrier billing almost a decade ago.
High transaction costs are the reason Steam, the popular PC gaming digital distribution platform, stopped accepting bitcoin late last year. Digital content purchases were once seen as an ideal use case for bitcoin.
If the libertarian ideals behind bitcoin are to ever materialize, a true alternative needs to emerge. I won't pretend to guess what that looks like or if some obscure cryptocurrency on the market meets that criteria.
One interesting development that emerged this past week was Aliant Payment Systems' announcement that it is now offering merchants the ability to accept Litecoin payments. The company expects that cryptocurrency to emerge as a prominent everyday payment option.
The challenge there will be whether crypto enthusiasts can convince the masses why an alternative to today's payments system is needed. I wouldn't hold my breath on that happening.
Now, if Nakamoto ever reveals himself, and with a true bitcoin alternative, then we might have something. Until then, cryptocurrencices will remain in the realm of a system it was meant to oppose.
Will Hernandez Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.