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Skeptic says bitcoin will “always be currency of the future”

Remember when bitcoin was going to disrupt the world’s banking system? That was two years ago and, while new payment platforms like Venmo and Apple Pay have gained traction, virtual currencies now feel more like a fad than a phenomenon.

At least that’s the view of Felix Salmon, a financial blogger and early bitcoin skeptic, who did his best to dump cold water on a room of alt-currency enthusiasts gathered Monday at a Bloomberg event titled “Bitcoin: Beyond the Currency” in New York City.

Bloomberg bitcoin

“This is pure Silicon Valley utopianism,” said Salmon, suggesting that bitcoin backers are blinded by “solutionism” and adding that investors who embrace the currency are no more rational than goldbugs.

Salmon also pointed out that, as a five-year-old technology, bitcoin has grown long in the tooth even as it fails to make inroads among ordinary consumers.

“I don’t think it’s going to zero [dollars], but it will always be currency of the future,” said Salmon, who also took shots at the motives of Barry Silbert, a large investor in bitcoin who acted as Salmon’s opponent in an occasionally salty debate over bitcoin’s future.

Silbert, meanwhile, got in a few licks of his own, telling the purple-suited Salmon that he may have wit and style, but that Silbert had the facts on his side.

So who was right? As someone who has written about bitcoin for two years and shared some of the fascination over a new borderless money system, I found that Salmon made the stronger points.

Even though he hammed up his stage role, Salmon drove home some obvious truths: bitcoin remains too complex for the average person to understand, let alone use; the global banking system is indeed broken but that doesn’t mean bitcoin is the solution; bitcoin is not — and never will be — relevant for “normal” people.

He did, however, acknowledge that virtual currencies have attracted an incredible amount of “intellectual capacity” and that the repositories of GitHub are now filled with an “open source technology that will be incredibly robust and that people will build on top of it” — but that such building should be directed at existing currencies, not virtual ones.

Salmon’s suggestion is also consistent with others who think the public ledger “blockchain” function at the core of bitcoin, which allows strangers to verify if a transaction has taken place, has a promising future. (Indeed, this week a high-profile group of tech figures made a $21 million bet that the blockchain will disrupt the work of trustees, notaries and other record keepers).

Overall, Salmon’s skepticism appeared to win him few friends in a room of bitcoin believers (my elevator ride down was full of people denouncing him), but at a time when Apple Pay is ascendant, it’s hard to see how virtual currencies fit in the mix.

11 Responses to “Skeptic says bitcoin will “always be currency of the future””

  1. hostage of encryption

    I’m trying to set up some kind of bitcoin account to send $500 to unencrypt my files. I’m not sure I will be able to figure it out in time. They gave me a week. I’ve spent about 5 hours so far. If they accepted almost any other kind of payment I would have been done about 4 1/2 hours ago.

    He’s right, this will never catch on….

  2. Skeptics always say they think the Blockchain technology is a good thing but don’t accept Bitcoin is a viable currency. That makes me think they don’t understand what is going on. You can already use Bitcoins to trade on the money markets and by goods online. It’s already here. The question is how big it will ultimately become and how quickly it is adopted.

  3. Mike Germaine

    Bugs me when people say bitcoin is too complicated for the average person to understand.
    Yes, the average person doesn’t understand the TCP/IP protocol either, but they can use the web just fine.

    • Coenraad Loubser

      You’re correct. Everyone understands that they can buy stuff with money and that some things are better than others. Ultimately, governments will want the ultimate hedge/insurance against global economic collapse in their hands, and that is Bitcoin.

      • This doesn’t make any sense and I think it belies a basic misunderstanding of macroeconomics on the part of Bitcoin proponents. As the experience with the Euro demonstrates, nations giving up control of their currency leaves them unable to respond to economic downturns through the use of monetary policy. Largely Southern European countries have been unable to help their economies recover through Central Bank actions because they’ve ceded control of their currency to a Euro-wide currency and Central Bank, without a corresponding automatic system of monetary transfers from better off Euro states to lesser off Euro states. Why most world governments would emulate that doesn’t appear clear to me.

        • Governments have demonstrated, however, a remarkable incapacity and inefficiency when it comes to monetary management. Rapid inflation, currency wars, etc …has in large part harmed the respective economies more than enabled them. Most of the time, the intent being to push the problem to “tomorrow” or to another nation to deal with. At the core, it is resultant, as even your Euro example demonstrates, of a centralized solution that can’t possibly fulfill the best interests of the wider public at hand. It is because of this, that there are many who don’t desire that their government have the authoritative control of monetary policy.

          The major issue bitcoin proposes to address is the centralization of that power by acknowledging we are each no longer markets operating within isolated boundaries, but rather a global economy dependent upon trade with each other.

  4. In 2014 it is news when a relatively intelligent person is skeptical of Bitcoin. But where are the http, smtp, tcp/ip, and p2p skeptics in 2014? At what point does a skeptic lose the moniker ‘relatively intelligent’?

  5. BitcoinZAR

    Both had good points, but I think Silbert had better points for me. I agree with Salmon that bitcoin is still too complex for most people, but the apps are getting much better, and so are the wallet sites. Its much easier to create multisig wallets now, and more map apps and wallets for mobile that are more intuitive. So much money poured into bitcoin this year, I think 2015 is going to be big.