Bitcoin And The Blockchain – Is The Golden Goose Cooked?

  Hi everyone, 

I’m depressed. 

Are you depressed? 

Just looked at the value of my crypto portfolio and that just about did it. 

Dark thoughts have entered my psyche. 

The speculative bubble that crypto has existed in for the last couple of months is over and we all got crushed. I was one of those people who argued that the likes of Jim Rickards and Peter Schiff were wrong. This isn’t tulip mania revisited, bitcoin has a use case, it has utility. It has a future, its a revolution whose time has come. After all they have been promising us that gold is going to the moon for the last five years (still waiting guys) so what do they know, right? 

Why don’t they get the potentially transformative power that a decentralised ledger and financial sovereignty has to offer? 

Then in a painful moment of clarity I realised they may be right and I may be wrong. 

Look at the bitcoin price chart and it demonstrates a classic asset bubble shape. It’s almost perfect and the fall might not be over yet. 

My mood was made no better after watching an interview with Richard Heart on YouTube Now Richard is (or rather was) a bitcoin evangelist, a bitcoin maximalist. So to hear him speak so negatively about the space was shocking. 

Now Richard has a rich and colourful past but his dialectic is tough to hear but hard to contest. Let me warn anyone watching the interview with ‘Ivan on Tech’ that Richard does not hold back. His language is let’s say expressive. 

It did however crystallize many of the thoughts I have had over the last few months. Richard’s first point is that the current price boom is over. At least for now. The world is full of people predicting a bitcoin price of $50,000 or $100,000 or Ethereum to moon, or Ripple to $5. You know the drill 

I found myself asking why would that occur?  What is the trigger for that to happen if the speculative bubble is burst? 

Wanting it to be true because you hold some just doesn’t cut it.  Richard Heart goes further by asking who is going to buy it. His point is we needed Wall Street to come in with big money for the price to rise further. But guess what after the initial futures contracts they dumped bitcoin very hard along with all the weak hands that bought it at $19,000. Bitcoin futures value was relatively small anyway. Everyone who wanted to invest including Mom and Dad is already in so where is the demand to come from. 

His other point is that as we stand there is no utility. Can you pay your rent with bitcoin? Can you pay for your groceries with your favourite token? No you can’t. The industry needs to start showing us some real life use cases. Some real value. Some real adoption and thats some way in the future. Surely though this is the only way to increase demand and price and convince the masses of legitimacy.   

The altcoin market is even worse. It is entirely speculative and a lot of people have made a lot of money and well done to them. At the time of writing however there are 1526 coins and tokens listed on Coinmarketcap. I am sure there are some tremendous projects amongst them but does anyone know (outside the top 20) which ones? None of them have had to face the cold hard rock face of actual use and scalability. 

Has their code been tested? Is it as strong and robust as bitcoin? 

We don’t know yet but sadly I suspect most of them will amount to nothing just inventions to raise ICO money. Its pump and dump all the way. 

For dotcom IPO scam read crypto ICO scam. Again referencing Richard Heart’s interview he is merciless in his technical critique of one the most popular altcoins and his argument is difficult to contradict. He could probably do the same to a number of others. 

Another point to consider for bitcoin and the blockchain is that first innovators are rarely the ones which finally get mass adoption. Why? Because newcomers have the advantage of avoiding all the problems associated with the first technology. They don’t make the same mistakes as the originators; they know what problem to solve from day one. 

So will there be a better coin than bitcoin. Its code is the most secure and the most robust, its developers the best butat the cost of flexibility, its issues are well known. The Lightning Network is being heralded as the saviour of bitcoin but the lightning network is open source, anyone can use it. Will the classic blockchain be superseded by some variant ? Hashgraph or the Tangle? I have no idea, does anyone? 

Another issue Richard raises is the idea that giant corporations will adopt some altcoin project technology. He rejects this idea. We often see reports that  company X is in discussion with crypto company Y with a view to incorporating the blockchain into there business ‘In discussion’ is not adoption; ‘testing’ is not adoption. Is big business just in the process of ‘picking brains’? Who knows? 

Some SME’s will undoubtedly find use cases for some coins, but is an Amazon or Facebook going to adopt an existing altcoin. No, they will develop their own. These are giant corporations with the means to produce their own coin anyway. Why would they use some one else’s? Decentralisation crushed by big business once again. 

The blockchain technology is not even such a big deal anymore. Go to IBM and they will make you a blockchain of your very own. Throw in a spate of hacks, broken exchanges, media FUD, fraudulent crypto lending platforms, community infighting (Bitcoin vs Bitcoin Cash) and the onslaught of government regulation its easy to see why the future is in doubt. 

Don’t underestimate the power of government and central banks to crush the bitcoin revolution either. People say that bitcoin and the blockchain cannot be stopped its decentralised and there are no CEO’s to convict and no bitcoin company to shut down. 

That is wrong. 

Start closing down exchanges, start closing people’s bank accounts and Joe Public will run for the hills. Remember government has all the guns if push comes to shove. 

So dear reader all that being said can anyone explain to me why I still feel positive about the crypto and blockchain future? That we will finally overcome? If I had to make a guess the space will follow the dotcom bubble pattern. We will suffer all the birthing pains that the internet did but eventually the cream will rise to the top. The industry will look very different to how it looks now and nothing like you expect but it will exist. 

Young people will be the deciding factor. Having grown up digitally cryptocurrency and blockchain will feel natural and normal to them. What millennial is interested in storing value in some shiny metal. It will be alien to them 

The height of tulip mania was in the year 1637 followed by a dramatic collapse. 380 years later in 2017 the Netherlands alone produced 2,000,000,000 tulips. 

There is hope for us yet.