Missing the point on bitcoin
It may be boring to say that bitcoin is useless as a currency, but that blockchain technology has a future. But it's true, says Merryn Somerset Webb.
Last week I wrote about bitcoin. It is (or was, before its 50% crash) one of the most obvious speculative bubbles our generation has ever seen. This didn't go down well with some. It turns out that writing about cryptocurrencies is nearly as dangerous as writing about Scottish politics. I got some very nasty mail, presumably from people who have bet a bit too much on bitcoin (lots of swear words). I got some silly emails (arguing mainly that as bitcoin has gone up a lot in the past, it will go up a lot in the future). And I got a good number of sensible, clever and thoughtful emails.
But still a lot of them missed what I think is the point. It has become pretty boring to say that blockchain technology has a future. But it probably does. A shared ledger technology that allows encrypted data to be exchanged privately between individuals and companies could disintermediate stock exchanges, transform payment systems, and (my own hobby horse) reinvigorate shareholder democracy, by enabling the return of voting power to the real beneficiary owners of equities (retail investors like you and me). It's also likely at some point to create real profits.
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Regular readers will know that we love innovation, that we constantly praise human ingenuity, and that one of our aims is to ensure that you get into the next long-term sustainable big thing in good time. But you should, I suspect, put bitcoin and the blockchain to one side for now. It'll be a while before it is clear who will find a way to create sustainable value from the systems (read our own Dominic Frisby on this at our website). Instead, see how technology is transforming much of Africa, then read Mike Tubbs's cover story on how firms that are already successful are using research and development investment to gain a growth edge. These are the kinds of investments that will make you tangible returns in real money.
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