Emerging from the Dark Ages: The Journey of Bitcoin and the Blockchain
If you took a time machine and went back to the Dark Ages, you would see people languishing in jail, and crowds chanting, “Burn the witches!” In those days, superstition and violence was the norm. The Roman Catholic Church orchestrated the Inquisition to persecute heretics and the forces of “evil.” Famine and disease were common. Poverty, constant warfare, and the Bubonic plague killed tens of millions of people. Cultural growth was stagnant.
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However, through these gloomy centuries, new ideas and culture were born. During the Dark Ages, the groundwork was laid for a new age: the Renaissance.
Today, some might see similar darkness surrounding the Bitcoin ecosystem. However, developments are occurring in several areas, such as technological, social, legal and financial. These advancements will make things brighter. As a result, Bitcoin and the blockchain technology will soon flourish and usher us into an amazing New Age.
Are we in a “Dark Age?”
If you take the same time machine and return to the present, you will notice remarkable similarities with the Dark Ages. You would hear voices howling “Bitcoin is Evil,” as pronounced by Nobel laureate economist Paul Krugman. You would also see people in jail, as is the case for some Bitcoin pioneering entrepreneurs, such as Charlie Shrem. Indeed, you would feel that we are again in a gloomy and backward period: The price of bitcoin remains volatile, and many people remain fearful of the unknown; indeed, many people resist change.
Today, as in the Dark Ages, you would see that myths and legends abound. Skeptics claim that “Bitcoin is a Ponzi scheme,” “It is a fad,” and “It is used mainly for illicit activities.” Some explicitly accuse Bitcoin of attracting criminals and, of being “highly unstable and disruptive to our economy,” as put forward by Senator Joe Manchin. Others have already pronounced Bitcoin dead.
During the Dark Ages, people did not realize the immensity of the changes that they were going through. They did not notice that they were setting the stage for the Renaissance. Similarly, today, many people may not fully realize that our civilization is at the threshold of a new age. They may not perceive that the changes Bitcoin and the blockchain will bring about are so revolutionary that they will profoundly change the way we do things, even, perhaps, our way of life.
The Light is Coming
We are slowly but surely coming out of the dark. New developments related to Bitcoin and the blockchain technology surface constantly. The consequences of these developments are far-reaching. We may not fully perceive the magnitude of their impact just yet.
The good news is that a lot is happening for Bitcoin and the blockchain technology. For example, respected entrepreneurs are entering the Bitcoin ecosystem in substantial numbers. Venture capital continues to flow. According to Tomasz Tunguz, “Bitcoin is the fastest growing area of startup investment in 2015.”
Regarding the financial markets, more ETFs are now poised to be launched, such as the Winklevoss Bitcoin Trust ETF. While, recently, ARK Invest announced that it will become the first public fund manager to invest in Bitcoin, stating that, “Bitcoin could disrupt the $500 billion intermediary payment platform industry which includes credit cards, electronic payments and remittances, and might empower the creation of a new group of companies and industries.”
A financial services start up, R3 CEV, will lead an effort in which the world’s biggest banks join forces to create a set of standards for the use of blockchain technology. These banks are Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, JPMorgan, State Street, Royal Bank of Scotland and UBS.
Bitcoin exchanges and services are expanding all over the world. For example, Coinbase nows offers its services in 28 countries. BitNexo uses the blockchain to help small and medium-sized entrepreneurs perform financial transactions between Asia and Latin America quickly, securely, and with low fees. And, in the farthest corner of the world, Yaykuy is helping Chileans to buy and sell bitcoins using pesos.
Similarly, big and well-established companies and financial institutions are also joining the Bitcoin ecosystem in force. As reported by the Wall Street Journal, Visa, NASDAQ, Capital One Finacial Corp. and others are investing $30 million in a bitcoin-related startup. Specifically, these companies are investing in Chain Inc., which “works with banks and other institutions to develop ways to trade and transfer financial assets using the system that underpins the virtual currency Bitcoin.”
Innovations Persevere
Technological innovations keep taking place in the Bitcoin space unabated — especially in the mining industry. In spite of big scandals like Butterfly Labs (BFL), the mining industry has continued to make progress. Allegedly, BFL “delayed shipment or failed to deliver paid-for Bitcoin mining computers, costing consumers tens of millions.” Nevertheless, mining hardware has continued to evolve and improve amidst adversity, from CPUs, GPUs, and FPGAs, to ASICs (application-specific integrated circuits), improving the energy efficiency per gigahash greatly.
One of the latest mining innovations is the 21 Bitcoin Computer. It was recently announced as the first computer with native hardware and software support for the Bitcoin protocol — available on Amazon for $399.00 USD. The 21 Bitcoin Computer allows users to “Buy digital goods with the constant stream of bitcoin mined by a 21 Bitcoin Chip; sell anything to anyone for bitcoin with the built-in 21 Micropayments Server; and easily build bitcoin-payable apps, services, and devices.” Funding for the 21 Bitcoin Computer comes from Qualcomm, Cisco and Andreessen Horowitz.
Obstacles Still Remain
Granted, legal issues toward greater Bitcoin legitimization remain in several parts of the world. In Russia, you might be punished for selling and distributing bitcoins. The government of China does not allow financial institutions to deal with bitcoins, although people are free to use the cryptocurrency to buy and sell commodities.
Nevertheless, progress is being made steadily. For instance, the status of Bitcoin is becoming clearer in the U.S. In September 2015, the U.S. Commodity Futures Trading Commission (CFTC) ruled that Bitcoin is a commodity. Notice that in March 2014, the Internal Revenue Services (IRS) had declared that Bitcoin should be treated as property for federal tax purposes.
Most importantly, communication and education about Bitcoin is booming. Universities and centers of knowledge all over the world are embracing Bitcoin. Stanford University, Princeton University, New York University and many other prestigious institutions are imparting Bitcoin education to massive numbers of students. In parallel, the Crypto Currency Certification Consortium is offering professional certifications, such as “Certified Bitcoin Professional” and “Certified Bitcoin Expert.”
So, Bitcoin and the blockchain technology will emerge soon from the darkness and usher us into a more promising New Age.
Do you think things will improve for Bitcoin soon? Let us know in the comments below!
Images courtesy of Wikipedia Commons.
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