The media has been lampooning bitcoin by proclaiming that bitcoin has failed. For example, popular technology columnist John C. Dvorak has said that bitcoin is a “screwball scheme to bypass the system” and that bitcoin is “bogus currency”. In another article written by Tim Worstall of Forbes magazine, he declares (for the second time) the death of bitcoin in an article titled, “The End of Bitcoin Part II”. Timothy B. Lee a contributor to the online website, “Ars Technica”, writes a gloomy article that announces bitcoin has “imploded” due to a 90% reduction in price.
There is no denying that bitcoin has dropped in price, but the question is has it failed? Mr. Dvorak compares bitcoin to other failed currencies including Beenz, sponsored by Oracle dictator Larry Ellison, and Flooz a currency sponsored by Whoopi Goldberg. What Mr. Dvorak fails to realize is that Flooz and Beenz are corporations, central authorities that control the existence and value of their monetary units they have created. If the corporation fails, perhaps by filing for bankruptcy, by dissolution, or even by, heaven forbid, a nuclear strike from a war then the currency will fail. Bitcoin, however, has no central authority and because it is decentralized it cannot fail. Bitcoin is based on a peer-to-peer (P2P) network based on thousands of users running the bitcoin software client. If one were to attempt to stop the proliferation of bitcoin one could argue the entire Internet would have to be stopped.
Bitcoin can drop in price, but it is highly unlikely, most likely impossible, that the value of bitcoin will drop to zero. Using the price of bitcoin as an indicator of failure is like using the price of gold to determine failure. Gold cannot “fail”. Bitcoin cannot “fail”.
Nicely reasoned.
ReplyDeleteDvorak has failed!
Maybe the people claiming that bitcoin has "failed" should first define their criteria for success, along with a time-line for said success.
ReplyDeleteI could confidently claim that Bitcoin has indeed "failed" as an investment vehicle from May 2011 to Oct 2011.
The real question(s) that I would like to see discussed are one such as:
"Has Bitcoin been an appreciable success as an alternative currency?"
"How extensive are the opportunities for an individual to buy products and services using Bitcoin?"
"How extensive are the opportunities for an individual to securely store and retrieve accumulated wealth (which I define as purchasing power) using Bitcoin?