Photo: Shutterstock
Boomers hate Bitcoin. At least they did at the beginning. But who could blame them? In the early stages of its development, bitcoin was nothing more than a joke, a fake currency for people who wanted to buy drugs on the deep web. To the banks it was anathema, the fruit of a fever dream shared by ignorant young people, criminals and dangerous anarchists. It was a flash in the pan; something to be ignored while it lasted.
However, as Kyle Torpey points out in his fascinating op-ed over on Bitcoin Magazine, the boomers and the banks seriously miscalculated how long they would have to wait. After bitcoin first entered the zeitgeist it was given a matter of months before it would inevitably fizzle out. To be fair, bitcoin did first gain widespread attention in connection with its use as a means of payment for illicit activities on the internet. However, even after bitcoin had broken through initially and started getting some real usage, it was dismissed as something minor and destined to fade away.
That was a big miscalculation on the part of traditional finance. Bitcoin showed itself to have some staying power, and the months turned into a year, the years starting adding up, and then the bullrun of 2017 happened and bitcoin took the world by storm. The bull run was the blow that broke the boomer’s back. Once money started pouring into bitcoin and its price began to rise, it lost its marginal status and become fair game for comers of all stripes and sizes.
So how did the banks respond to bitcoin’s tenacity? With disdain for the unwashed masses. Major figures across banking excoriated cryptocurrency in the press, calling it a fad, its price rise a mania and saying that people who bought in were getting involved in a ponzi scheme. And while there were many that got involved in cryptocurrency at that time because of the buzz it had generated, people who were moved at the start by purely economic interests, many of these people, once exposed to decentralized economic theory, started learning about blockchain technology and the underlying value of the entities that were running roughshod over traditional finance. But the budding community didn’t bother the bankers or their mouthpieces in traditional media, there message was clear: bitcoin and all other cryptocurrencies had no future. This was all just ephemera, a passing infatuation of an ineffective age.
The message was loud and clear, and was lent some credence in the eyes of laymen by the market tumble bitcoin took after reaching its highs in late 2017. When the price of bitcoin shed more than 3⁄4 of its value the cryptocurrency community also lost a lot of periphery members, and mainstream media wholesale embraced the narrative that crypto was a gimmick only useful in the most iniquitous corners of the internet.
It was around this time however, as most cryptocurrencies made their way into the red cave of crypto winter, a curious thing starting becoming more prevalent. Despite poor market performances almost across the board, institutions started showing more and more interest in cryptocurrency, albeit in an indirect manner. Torpey hits it on the nose in his op-ed when he identifies this about face with the “blockchain not bitcoin” meme. By meme here I do not mean your typical internet fare, but rather a typically sterile example of corporate brainthink that was just uninspired enough to become the stance of nearly every beacon of traditional finance. Blockchain all of a sudden was acceptable, nay, it was essential, so long as you purged it of the sin of cryptocurrency.
Now, as Torpey points out, there is nothing inherently wrong with banks trying to improve the technology that backs the services they provide to their customers. But this isn’t actually what they are doing. For the most part, banks and financial institutions are interested in creating permissioned systems, which not only are a complete perversion of the principles behind bitcoin and other cryptocurrency development, but may not even be improvements of what these institutions were using in the past.
Essential to the idea of cryptocurrency, in its original form, was its capacity to decentralize. I am fully aware that “decentralize” has become a buzzword, but it’s still real to me damnit, rather, it is a real principle that to many people in this space constitutes the real value behind digital currency, myself included. What do I mean exactly by decentralization? Well you can take bitcoin as an example. Decentralization is achieved with bitcoin via its proof of work validation structure. This structure ensures, via its rewards system, that the security of the currency is upheld and payments are processed without the “help” of centralized authority.
When you have a structure like that in place, which requires a token of value to keep it moving, you can then build more traditional structure, like the Lightning Network, on top of it without having to sacrifice the regulatory freedom that you enjoy.
What most companies are coming out with now is like the Lightning Network without the bitcoin. Take a look at Libra, for example. What Facebook is doing, by backing Libra with baskets of fiat currency and putting traditional finance companies in charge, is making a glorified version of Paypal.
I agree with what Torpey wrote in his op-ed, but would just additionally add that bitcoin is not the only currency that has remained true to decentralization. At Bytecoin we have been doing our part to build further where bitcoin left off and offer users even more protection from regulation and the claws of traditional finance.
Conceptually, our upcoming Gateway Project is not so different from the above mentioned Lightning Network. With this release we are using our cryptographically-protected base to back up a transposed edition of our currency on other blockchains, which will increase the currency’s capabilities and convenience for our users.
