Where is Bitcoin today? When the cryptocurrency first burst onto the scene there was great hype surrounding it. Those of the libertarian and “anarcho”-capitalist stripe (and some misguided Marxists) were foaming at the mouth. The truly believed that this digital currency was going to be the death of the state and the financial polyopoly that have mastered the current stage of capitalist development. Many were very skeptical of these wild claims. I counted myself amongst them. I even critiqued the theoretical currency in a book I published a few years ago about utopian notions of capitalism.
Bitcoin has proved one thing conclusively: it is wholly without the stability needed to be a currency. It saw a market high of $19,000 in December 2017. Since then it has fallen to a low of $7,000. These wild fluctuations are part-in-parcel of a lack of regulation. Without overall regulation, all kinds of nasty incidents can take place – and they certainly have. Theft and manipulation have become the reality of Bitcoin.
Bitcoin as a currency has utterly failed. Hardly any vendors accept it as a legitimate form of payment. Business all across the globe would rather have the much more stable USD than some wildly fluctuating fad currency. Theft of Bitcoins is rampant and has led to massive losses by people. It has gotten so bad that there were people talking about suicide on the /r/Bitcoin Reddit a few years ago. These are not isolated incidents, they’re quite frequent.
Part of this problem is the lack of consumer protection. If you get scammed by some kind of Bitcoin fraud, you don’t have any recourse. It’s impossible to even really know where a stolen amount is even kept. The government really has no jurisdiction over such incidents due to it’s maneuvering around government regulation. It’s rather hypocritical as well. If the government shouldn’t be involved in the currency, how can victims of it then turn to the government for protection?
The fact is there is no reason to use Bitcoin as a currency, and no one really is. What I predicted would happen did, it would turn into a stock, something to be speculated on only. This is exactly what has happened. The market has very clearly said that it is not a valid form of payment. Those who hold it now, only do so, so that they can sell it to someone else in the future for more money than they invested in it. This is not a currency, it’s a speculative “asset”.
For Bitcoin to truly be a currency it has to fulfill three basic functions: One, it has to act as a medium of exchange. Two, it has to act as a store of value. Three, it has to act as a unit of account. The volatility of Bitcoin has made all these functions impossible. Well the first we’ve seen quite clearly from the market. As for the second, instability makes it very hard to actually know how much value you have stored up when the price of Bitcoin keeps changing. What you have today is worth $100 USD, then tomorrow its $25. As for the third, it should be quite as obvious as the previous two.
As we can see, Bitcoin has not fulfilled the promises its users have made. Having said that, I don’t see it going away any time soon. The idea behind the crypto-currency will ling on as an investment. Its heyday, however, is long over. The hype has been just that.