I wrote a bunch of posts on bitcoin between 2012-2015, but they tailed off a bit in late 2015 and 2016 as my attention turned to other subjects, namely old fashioned banknotes and cash, a terrifically fertile topic. Because my bitcoin posts tended to get a lot of comments at the time, I thought it would be worthwhile to go back and review some of the predictions I made, both for my sake and that of my readers.
My predictions tend to fall into three related buckets.
- Bitcoins will not become a generally-accepted medium of exchange
- Even mainstream organizations like the Fed might one day want to adopt bitcoin tech
- Bitcoin will fall to zero
On the first front, I’ve consistently written that bitcoin won’t become a generally-accepted medium of exchange because of its volatility. And this prediction has panned out, so far at least. No, bitcoin has not destroyed VISA, nor has it driven the share prices of remittance providers like Western Union to zero, nor has it been adopted by unbanked Africans and Bangladeshis.
From a more anecdotal perspective, I live in what I like to think is a fairly vibrant part of Montreal filled with early adopters, but I never see shops or cafes that accept bitcoin. None of my circle of friends and family have ever tried the stuff, and when they ask me about it, it’s always to gossip about the crazy high prices—not bitcoin-as-a-medium-of-exchange. Let’s face it, bitcoin and other cryptocoins are great speculative vehicles, but they’re flops as money.
On the second front, I’ve written about how the distributed ledger aspect of bitcoin could be split off from the token itself and used by financial institutions See here, for instance. This is the rough idea behind the “blockchain” movement that started up in 2015 or so. We’ll see if it pans out. I also predicted that central banks would adopt bitcoin technology before banning it, perhaps in the form of a distributed currency, and have since wrote multiple posts on the Fedcoin idea. No central bank has quite got there yet, but they’ve all started talking about digital currency and have even been experimenting with it. So I think I’ve done alright on these predictions.
It’s boring being right because you don’t learn anything. My last prediction, that bitcoin will hit zero, is my most interesting one because I got it so wrong. In 2012, I wrote:
“My hunch is that bitcoin still has a positive value because proper competition will take a few years to truly develop. Let’s see where we are in December 2013.”
By December 2013, bitcoin had hit $800, not $0. Similarly, this:
“There is no way to arbitrage this premium away directly, but over time competitors will peck away at it, causing bitcoin’s price to deteriorate back to its fundamental value, which I’d guess is