Believe it or not, Bitcoin has been around for ten years. During that period, it has done what no other traded asset has before: It has survived multiple bubble bursts and come back stronger every time. From its initial value around $0.01 to its last peak value of nearly $20,000, it experienced a whopping 200 million percent increase in value.
The computer network that verifies the transactions consumes more electricity than 159 countries in the world, including Ireland. Bitcoin has been called a fad and bubble by experts, who have predicted its demise on a regular basis. Ten years later, Bitcoin is still here.
What Did We Learn?
While the history of Bitcoin is fascinating, a more pertinent question is what to expect in the next ten years, especially in terms of their political and societal implications.Bitcoin Mining Factory
Let’s first start by reviewing the original reason Bitcoin was created. Its anonymous creator, operating under the pseudonym Satoshi Nakamoto, said that it was a direct response to the 2008 financial crisis and the government inflationary currency manipulations that had created it.
Highly inspired by anarcho-capitalism, he wanted to create inflation-proof money that did not rely on trust in a central player such as a bank or a government. His solution was a distributed computational system, which has grown into the world’s largest combined supercomputer.
In the process, several problems have emerged, preventing Bitcoin from a widespread adoption, despite its unprecedented success. Its key weakness is its rampant volatility, which makes it unsuitable for money. If Bitcoin, or any other form of digital currency, is ever going to have a chance of becoming an alternative to the dollar, it needs to be more stable than the inflation-ridden government money.
Second, cryptocurrencies are still clumsy and not as easy to use as “ordinary” money. Widespread adoption depends on solving this problem.
Third, Bitcoin is an energy hog. The cost of operating the network is surprisingly high, and the massive electricity consumption does not exactly give it a reputation as environmentally friendly. While this is not a crucial issue, it’s something that adds to the list of factors that impedes success.
Fourth, Bitcoin hasn’t scaled as well as Nakamoto had hoped. Due to the nature of its construction, much of the computing power is now collected in centralized mining pools. In this way much of the original impetus of avoiding centralization is undermined. This makes Bitcoin vulnerable to government crackdowns.
The ballooning national debt for future generations fueled by inflation is still an issue, but in the last few years the advent of social justice censorship on major tech platforms has brought about a new need for cryptocurrencies.
Patreon is a centralized hub for user payments to content creators, and recently it has experienced pressure from Mastercard to purge conservatives. Similarly, the Patreon-alternative SubscribeStar was deplatformed by PayPal and Stripe. After the Tree of Life-shooting, the Twitter-alternative Gab was similarly collectively punished for the sins of a single user and banned by PayPal and Stripe.
…content dissemination riddled with censorship…
YouTube is also a centralized hub for content dissemination riddled with censorship, purging, demonetization, and shadow banning. All these cases are practically screaming for a functional distributed alternative crypto-payment system, as well as distributed platforms for free speech that are resistant to government censorship and corporate banning.
Jordan Peterson and Dave Rubin have announced that they will create a Patreon alternative, but as a centralized actor they are still vulnerable to political pressure and censorship. This is an enormous market opportunity for cryptocurrencies. Solving the problem of free speech may turn out to be the path to widespread usage.
Be therefore not surprised if ten years from now, the next generation digital money and distributed social networks originated as a response to systemic censorship.