By now most of us are tired of hearing about Bitcoin and its outrageous valuations. We all know that it is a bubble, but still the juggernaut ploughs on.
If you step back however, this is just the latest and most public example of a prototype which accidentally became the operational product. The history of IT is littered with them and most techies have experienced the pain of replacing a decades old legacy system which was never intended to do the essential mission critical function which it now performs. Unfortunately Bitcoin is a lot like this.
This does not mean that Bitcoin is a failure, just that it is limited and, in a spirit of Agile / Lean adoption, the world and the Blockchain industry needs to learn from the experience and move on.
On the plus side:
Bitcoin is a great technology pilot of the original Blockchain Protocol Specification written by the mythical Satoshi Nakamoto (whoever (s)he/they happen to be).
Bitcoin has been widely and enthusiastically adopted outside the virtual world game space for which it was originally intended and is now often used in real world transactions.
Banks have started to trade in Bitcoin just like conventional currencies.
Other cryptocurrencies have become viable as a consequence, e.g. Ethereum.
Where we need to learn to do better:
Bitcoin and vanilla Blockchain don't have scaleable architectures. there is a limit to the number of coins which can be mined. Transactions and mining consume excessive amounts of power, so Blockchain now has the power consumption appetite of a small country. Transactions have now become as slow as traditional clearing system transactions.
Bitcoin never exploited the conditional contract features of Blockchain. This remains an area which is under exploited in many other Blockchain implementations outside the currency area.
Bitcoin has become an unregulated market. Some analysts refer to it more as a repository of value, than a currency. Its value has become extremely volatile due to over speculation. It definitely has attracted exploitation by criminal networks, leading to China's decision to ban it. The bulk of its coins are owned by a small number of people or organisations, offering the opportunity for extreme and pernicious manipulation.
There are multiple platforms and technologies, but no apparent standards body to facilitate evolution and interoperability.
So where next and what is the future? To me one of the big questions for future cryptocurrencies is around regulation. The thing which made bitcoin so interesting to many people was its global ubiquity, unshackled by government regulation. Governments have become interested and think that they should involved. At the same time, many consumers distrust governments and see this as just another way to extend the modern feudalistic grip of their taxation systems. Additionally, as all national currencies are now based on promises or monetary brownie points rather than any tradeable commodity such as gold (with its notional intrinsic value) there is no reason why a consortium of international banks or other businesses/stakeholder could not do this equally well and there is even an opportunity for the United Nations to flex its muscles and get involved to deliver a truly global and frictionless currency. This could have implications for current leading currencies such as the US$ which dominates world trade due to early 20th Century International Agreements to use it as the international currency for shipping.
Additionally, quantum computing offers both enablement and risk. The complex mathematical protocols involved in mining currency and validating transactions would easily be handled by quantum computing, lending capacity to deal with volume scalability. However this same risk, also could undermine some of the security built into Blockchain.
Whatever the future, I believe that 2017 is the year that Bitcoin peaked and it is now time to hand over the reins to other successor cryptocurrencies.
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