My day started with $20 and an intense craving for an Americana. No surprise that I was down to just quarters after some errands, and my daughter’s need for after-school activity expenses. Still craving that Americana, I headed for the closest Starbucks. That brew would soon be mine. I had transferred a small amount of crypto from my Bitcoin wallet to my Starbucks mobile app a few days before, making the payment a breeze.
About 3 years ago, I got into crypto while my then 16-year-old interned remotely for a Virginia based start-up called Steemit. He writes code for the blockchain. Since that time, Steemit has grown and moved to Austin, TX, and so has my son. He’s now 19, and lives 2,000 miles from me just a few blocks from the state capitol building.
While I don’t understand how it’s exactly made, he convinced me early on that digital currencies will someday become the cashless payment method preferred by businesses and consumers around the world. Bitcoin is the largest and most well-known digital currency, but like a precious gem, Bitcoin is rare and in limited supply. While cash transactions are losing ground to digital payment methods in governments around the world, cryptocurrencies have yet to establish enough branding credibility to be taken seriously in the U.S.
Most business owners have hesitated to invest in the technologies needed to move forward with this cashless initiative. Many because they don’t understand it, but most because they don’t have faith in it. To make matters worse, it’s not easy to ride the extreme wave of Bitcoin’s fluctuating value, and Bitcoin transactions have more expensive for consumers. The private banking system is incentivized to suppress and manipulate the market, and the relatively immature and unregulated cryptocurrency allows for blatant fraud. But there is still a large congregation of believers in cryptocurrencies, and Bitcoin has become a legitimate source of funds. Many who adapted early have reaped more than the benefits of increased profits. Merchants who post "Bitcoin Accepted Here" appeal to an untapped loyal base of new customers. It’s no surprise that companies like Telsa and Microsoft adapted quickly to the promise of a cashless society. It is sexy and innovative marketing. There are many U.S. based companies who you might not expect that accept Crypto. Papa John’s, Overstock.com, OkCupid, Wikipedia, and Square are just a few. It’s surprising how many products and services can be purchased with cryptocurrency, yet most consumers still don’t have confidence in this form of cashless payment.
How is Bitcoin going to survive when CEOs like Starbucks, Howard Schultz says things like, “One or a few legitimate cryptocurrencies are coming, but Bitcoin is not one of them.” Trusted thought leaders in the financial world, like CEO Jamie Dimon of JP Morgan, damage Bitcoin’s tenability claiming Bitcoin is a “fraud.”
As I write this, the value of Bitcoin has been dropping faster than the blizzarding snow that has trapped me inside today. Coindesk reports as much as $400 million in cryptocurrencies was sold in the past few months by the bankruptcy trustee of the now-defunct Japanese bitcoin exchange Mt. Gox. In 2014, Mt. Gox suspended trading, closed its exchange service, and announced to customers that approximately 850,000 Bitcoins were missing, and likely stolen.
At the same time, Bloomsburg attributes the fall of Bitcoin to the U.S. Securities and Exchange Commission’s registration requirements for online exchanges.
Some might think this is a blow to cryptocurrency and Bitcoin supporters, but many developers may view this as an opportunity. The fact that the SEC is trying to regulate this cashless community and that the biggest crypto heist in history has been revealed helps validate that Bitcoin and other cryptocurrencies are legitimate. Still, developers will have to do more to repair the damage.
Will Bitcoin be dethroned? Unlikely. Bitcoin doesn’t rely solely on the skills of its development team. Nigerians were the first to pioneer Bitcoin virtual exchange in trade. Their thirst for a stable currency and economic development has quickly spread to Kenya, Zimbabwe, Ghana and South Africa. Bitcoin may one day have a superior competitor. Just as there are multiple forms of cash in the world, there are multiple forms of cryptocurrencies. Bitcoin’s greatest failing today is that it cannot support currency transactions at global levels needed for it to be as popular as major fiat currencies. I suspect that someday one or two cryptocurrencies will be on par with the “coin of the realm” status of traditional government-backed currencies, and that’s what Bitcoin supporters yearn for.
Thousands of developers participate in the innovation of blockchain for the advancements of cryptocurrencies, and artificial intelligence. Dr. Pieter Wuille may have recently improved Bitcoin’s scalability with the adoption of Segregated Witness. “SegWit” is said to solve malleability limitations, mitigate block-chain size problems, and reduce transaction speeds. This advancement theoretically allows for a new type of network called lightening to make Bitcoin transactions faster and cheaper. This is just one innovative example of how Bitcoin developers continue to improve performance, design, technique, and communication in the blockchain. Bitcoin still is considered the king of cryptocurrencies because it was the first legitimate crypto tender to exist. It’s likely to step down from the throne one day, but like a wealthy, beloved monarch, it will be around and remembered for a very long time.