Peering Through the #FUD About #Crypto
Bitcoin has thrust cryptocurrencies into mainstream consciousness by shaking up the financial world in the past 9 years.
Since its inception in 2009, the preeminent cryptocurrency has thrown a spanner in the works of traditional banking and financial institutions and has paved the way for the creation of a plethora of industry-shaping virtual currencies and blockchain-based innovations.
The volatility of cryptocurrencies has created more than a few detractors and we’ve seen a number of headlines exclaiming the ‘death’ of Bitcoin and cryptocurrencies in general.
These obituaries have come from a wide variety of industry experts and commentators. While they’re almost always subjective, they portray a negative, fear-mongering mentality that detracts from the technological breakthroughs that have been sparked by blockchain technology.
Let’s take a look at some of the instances that have led to mainstream media outlets signaling the death of Bitcoin and examine where the industry is at midway through 2018.
It’s not difficult to find articles slamming Bitcoin and cryptocurrencies — just look at 99bitcoins.com, which has a compendium of Bitcoin obituaries that has now surpassed the 300 mark.
The earliest headline heralding the end of Bitcoin, according to the website, is an article entitled ‘Why Bitcoin can’t be a currency’ published in a blog entitled The Underground Economist in 2010. In essence, the writer pointed to Bitcoin’s constantly fluctuating value as the main reason why it shouldn’t be considered a currency.
“While Bitcoin has managed to bootstrap itself on a limited scale, it lacks any mechanism for dealing with fluctuations in demand. Increasing demand for Bitcoin will cause prices in terms of Bitcoin to drop (deflation), while decreasing demand will cause them to rise (inflation).”
Since then, the number of headlines suggesting that Bitcoin was doomed to fail has increased year on year. In 2017, there were a total of 118 Bitcoin obituaries articles.
These obituaries are any articles that predict the demise of Bitcoin, based on assumptions or quotes from a wide range of commentators. This includes mentions of fraud, ponzi schemes and money laundering and frankly anything that is negative enough to cast aspersions on the future of Bitcoin.
While the sheer number of articles that have predicted the death of Bitcoin may be humorous, a glance down the list of headlines from various publications tells a different story altogether.
Small scale blogs like the one that is credited for the first Bitcoin death article have a limited reach and aren’t likely to have a profound effect on the sentiment of a large group of people.
However, as the number of these articles increases, so too has the caliber and profile of the publications producing this content.
CNBC has covered cryptocurrencies extensively over the last few years, with content that is fairly objective in terms widespread coverage of both positive and negative sentiments towards the industry,
The most telling example of this was JPMorgan CEO Jamie Dimon comparing Bitcoin to the Dutch Tulip Mania before predicting it would blow up on CNBC. Perhaps more telling was the effect Dimon’s statements had on Bitcoin’s value, which fell after the American executive’s comments:
“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. Currencies have legal support. It will blow up.”
The Guardian published an editorial in November 2017 that labelled Bitcoin’s price as a bubble, and pointed to the costs of mining, slammed the endorsements by celebrities and made strong statements about Bitcoin’s primary use as means to buy drugs and pay ransoms online.
Forbes contributor Jay Adkisson wrote an op-ed which went on to describe the way Bitcoin is currently sold as a scam. The writer boiled down Bitcoin to a core existence as a number, without an intrinsic value.
He went on to suggest that cryptocurrencies lack ‘uniqueness,’ pointing to the sheer number of cryptocurrencies in existence.
The Telegraph also published a number of articles last year, drumming up ‘bubble’ rhetoric as the 2017 wound to a close. Abhishek Parajuli took a mighty swipe in his own op-ed on the platform, citing wild volatility, poor utility as a medium exchange as well as slow transaction speeds:
“So, hype aside, Bitcoins are lottery tickets. They have no underlying utility. When the music stops, those left holding them will be burned.”
Wall Street Journal contributor James Mackintosh weighed in on the value of Bitcoin in mid-September 2017. In essence, the writer delved into the notion of Bitcoin having become digital gold as a store of value.