5 years of Bitcoin

[WompRat]

Satoshi's original paper on Bitcoin was published just over 5 years ago on 1 November 2008 and it is amazing it has grown so quickly and so fast. It shows that at its heart there is a strong idea, but I have become more and more convinced that it has risen too fast, become far too risky and detached itself from any chance of being a successful long term payment system.

2013 has been a great year for digital wallets and micro-transactions.  Google, Apple, Paypal and many others are experimenting with various payment technologies and companies like King and Rovio are making large sums from small in app payments, so much so that it is almost the de-facto model now for new mobile apps.  What does this have to do with Bitcoin? Nothing, and that is the point.  For all its exposure this year, no big credible organisation is using it or announced any plans to use it.  In fact with the closure of Silk Road there is now almost no big organisation accepting Bitcoin as a payment and honestly why would they.  Tiny companies might enjoy the gamble, but few accountants are going to want to put this kind of volatility on their balance sheet or want to deal with the costs of selling and transferring back into their native currency.

I first bought Bitcoins last year as a means of paying for a VPN service with some degree of anonymity.  It is the only tangible thing I have bought with Bitcoin.  As an ongoing service that cares about user anonymity it is perfectly suited for this type of payment. I paid about 0.5 bit coins for about 3 months access, but rather than just take the money the VPN company recalculated the length of service based on daily Bitcoin price as the price rose.  At one stage I had about 2 years to go, based on just one payment.  Lucky as that is I am not going to repeat it. I can imagine how silly I would have felt paying 1 coin for a pizza this January.   I would also never use a speculative investment without any trusted 3rd party involvement to pay for goods that I might have problem with such as electronic items or in fact anything on the high street.  The idea that Bitcoin can supercede existing international currency transactions is also ridiculous if you have ever experienced the problems and fees you encounter trying to convert Bitcoin back into a usable currency. 

I don't doubt that there are still opportunities to make money from speculating, but that is really all Bitcoin is now in my opinion.  It is a wobbly tower of bricks that just keeps on piling on the blocks as new money pours in.  I have been hoping we would find some level on which to stabilise this year, but I don't think it will ever happen. 

Good luck to you though.

[ilpirata79]

Merchants should just accept bitcoins and keep them, saving in addition some money for the fees, and seeing their wealth increase as the prize of bitcoin does.

Best regards,
ilpirata79

[kamant]

About half way through I thought you were going to make a really good point, but I was lost by the end. Am I missing something or is this just a nostalgic goodbye to a bygone era in your life?

[xchanga.com]

so do we say happy birthday bitcoins?

[miztaziggy]

I somewhat agree with what you're saying. The lack of mainstream uses is worrying. Even the lack of illegal uses for now is quite worrying.

The more speculative it becomes, the more likely a totally disastrous crash. The wildly fluctuating price relative to fiat currencies means it is hard to spend bitcoin or accept bitcoin as you have no idea what it is worth and will be worth tomorrow.

Personally I don't like the way bitcoin is becoming centralised. Only big money can now afford to mine profitably.

On the other hand, I do hope it spawns something that really does take off and become truly peer to peer. Taking power out of the hands of the banks that charge massive fees to move money over borders very slowly has to be a good thing.

[1life]

I <3 bitcoins, fuck fiat!

[PenAndPaper]

I <3 bitcoins, fuck fiat!

Obviously you haven't read what the op wrote. Lucky you 

[ainz]

As new people in e.g. emerging countries wake up, it'll surge and then fall back to a higher floor. India or Brazil next maybe? India's another billion people with a cultural attachment to gold / distrust of fiat. It's all speculation right now, but there are different levels of speculation. In the short-run traders are riding it up, selling and buying again after corrections to increase their holdings. But there's also longer term speculation on the future potential of Bitcoin as a fast, bureaucracy-free, un-blockable electronic payment system; and store of value.

There are crazy ideas out there using the anonymity, e.g. http://www.forbes.com/sites/andygreenberg/2013/11/18/meet-the-assassination-market-creator-whos-crowdfunding-murder-with-bitcoins

Chicken-and-egg situation, with volatility slowing adoption for commerce, which in turn magnifies the volatility. It behaves like a leveraged ETF that swings wildly on news. But payment platforms could mitigate the volatility e.g. by using futures (& other derivatives) transparently in the background as they develop to hedge against the volatility for both customers and businesses. If you believe in it, the best thing you can do is ask every business you patronize if they plan on accepting Bitcoin. Tell them you'd like to use it in future. Enough people do this and they will accept it.

Satoshi's core innovation: the blockchain's distributed consensus-based trust exchange and record-keeping machinery... is pure genius.

One thought I have (which won't be very popular round here) is that we could be looking at the "Altavista of cryptocoin" in Bitcoin. The "Google of cryptocoin" may come later.

[Wendigo]

I am not sure you should classify Baidu, Wikipedia, Reddit, WordPress and many others as small accountants but anyways who am I to give opinions 

[MicroGuy]

I don't doubt that there are still opportunities to make money from speculating

In my reality there are infinite opportunities left for speculating. Bitcoin is only the beginning of the coming digital age. Countless altcoins are being created and some will rise to directly compete with the all mighty Bitcoin. The question becomes "which one will it be"? http://coinmarketcap.com/

[wormbog]

Bitcoin is currently in a value inflation phase, which is needed before it can be used for large transaction uses like moving money across borders (like Western Union) and storing value (like precious metals). Once we get past this hyper-growth phase the price will settle down and merchants can adopt it without worries about volatility.

[aerobatic]

Bitcoin is currently in a value inflation phase, which is needed before it can be used for large transaction uses like moving money across borders (like Western Union) and storing value (like precious metals). Once we get past this hyper-growth phase the price will settle down and merchants can adopt it without worries about volatility.

And the closure of silk road and the recent US hearings were very helpful in establishing bitcoin as 'not to be feared'

[ainz]

And the closure of silk road and the recent US hearings were very helpful in establishing bitcoin as 'not to be feared'

Silk Road 2.0 came up 4 weeks later. The whole argument that "Bitcoin enables crime" is false; people have been committing crime using dollars and pounds for centuries!
Personally I don't believe that getting high should be a crime, but that's a different subject anyway.

Andy Greenberg @ Forbes is covering darknet / cryptocurrency issues well... in case you didn't know already.