Has Bitcoin lost its way?

It’s become a way to make dollars rather than a means to replace them

As Bitcoin has entered the mainstream it’s lost a lot of what made it special. In the beginning, it rose as a counterweight to the political and economic status quo. It combined game theory and emerging technology in novel ways that created something that was able to challenge that status quo.

Bitcoin wasn’t the first digital money. Among other examples, things like Liberty Dollars and E-Gold had been created in the years since the Internet blossomed. And all of them failed. All of them were crushed by a system whose power they challenged. If you’ve never heard of these early attempts at nationless digital cash it’s because they were suffocated quickly and efficiently. They all had something in common with the systems they challenged: centralization. Among other things, what made Bitcoin different was its radical decentralization. There was no central body to corrupt or punish, no single server to shut down, not even a known founder.

(Bitcoin’s founder was anonymous and disappeared soon after the project started to gain recognition. Their identity continues to remain a mystery. More on that here.)

In the first years of Bitcoin the community was populated with people who wanted to challenge the hegemony of the state. When I first became familiar with the world’s first cryptocurrency my biggest worry was that it would be crushed by the powers that it challenged. It was designed in such a way to resist such attacks but could it survive the full weight of governments and central banks? And if it did survive, could it thrive or would it always remain on the margins, always outside the mainstream?

It was a way to replace money. That no longer seems to be the case, it seems most users today see it as a method to increase their dollars, not replace them. That betrays the entire founding principle.

As I’ve watched it grow over the years the reaction of the status quo has surprised me. It never made a serious attempt to crush it, what it did instead was slowly co-opt it. It’s been turned into just another ticker Wall St trades. When most people invest in it today, they are not investing to grow Bitcoin but because they think it can grow dollars in their bank account.

In a way, this is the genius of the status quo — it recognized that it could not stop Bitcoin so it took it over instead. It’s like oil companies buying up renewable energy technology rather than trying to halt their advance.

This evolution of Bitcoin has been a disappointment to watch, but all is not lost. Bitcoin still retains a lot of what set it apart in the first place. Some of that will never go away. Perhaps this was the only way Bitcoin would ever become mainstream, with its sharpest edges blunted. And it’s also spawned an entire cryptocurrency industry. There are new projects building on the shoulders of what Bitcoin launched that carry forward that original vision. (I have two in mind that I plan to write on next.) Whatever happens to Bitcoin it will always be the first crack in the dam. The first time many of us reimagined what is possible. I’m still wholeheartedly rooting for Bitcoin’s success, even on these new terms because while it may not finish the fight, it did start it and it continues to open space for others moving down that path.

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This is part of an ongoing series exploring the potential for change inherent in cryptocurrency. Published so far: Bitcoin is so much more than money / What if deflation was good?/ The key to understanding Bitcoin / Monero & Decred are the new Bitcoin