Is Bitcoin on its death bed?
That was the question posed during a Sept. 21 panel at Tech Crunch Disrupt, a conference in San Francisco, as Bitcoin proponents speculated on the digital currency’s lackluster performance for venture capitalists and whether it would ever see a comeback.
The panelists included Wences Casares, CEO for the bitcoin bank Xapo; Bobby Lee, CEO of BTCC, China’s first Bitcoin exchange; and The New York Times Journalist Nathaniel Popper, author of Digital Gold, a book chronicling the birth of Bitcoin.
While optimistic, all three said they’d been dismayed by the currency's deteriorating value over the past year or two — and Casares estimated its plight would likely worsen before it improved.
“As an industry, we are paying the price around the hype of bitcoin about two years ago,” Casares said.
Referencing investment figures, he noted venture capitalists have poured more than $600 million into Bitcoin businesses since the currency launched.
“Everybody’s expectations were that this was going to change [world monetary systems] in six months, and that didn’t happen,” Casares said.
At present, one Bitcoin is valued at about $230, a far cry from its peak valuation in 2013 when its exchange rates totaled more than $1,200 per coin. Some analysts, Lee said, even believe the currency may bottom out at zero — a figure he doubts, yet doesn’t rule out either.
Making matters worse is another troubling notion about what might happen if Bitcoin’s slump continues. In his remarks, Casares said there is a very real scenario where Silicon Valley’s tech companies stop providing services for Bitcoin in favor of more lucrative business models. Bitcoin needs infrastructure to work, and this infrastructure means apps, financial platforms and support from traditional banking institutions.
“I would say that I’m the most biased Bitcoin person I can imagine, the most pro-Bitcoin person I can imagine,” Casares said. “And even then, I always tell people that they shouldn’t own an amount of Bitcoin they can’t afford to lose because I think there is a non-trivial chance that that amount goes to zero.”
Lee said the tragedy in Bitcoin’s possible demise would be the missed opportunity to benefit from an independent monetary system that relies on an unbiased code base, as opposed to typical currencies that rely on government management and consumer perceptions.
Despite this, the three unanimously endorse the idea that blockchain, the coding framework behind Bitcoin, would likely never go away. As a transactional database synced among all of its users, blockchain could be repurposed for other uses like personal identification or varieties of digital record keeping. And the state of Vermont has asked a coalition of stakeholders to consider whether the technology could help manage state records. Similarly, Popper suggested that blockchain could be a foundation for iteration. Bitcoin, the three agreed, could be the predecessor of a more successful currency, rebranded and ubiquitously accepted by major financial institutions.
Whatever the case, Lee said he and other advocates of the service believe the system has fundamentally changed the concept of monetization. Lee likened its transparency and innovation to the beginning of the World Wide Web.
“It will matter for sure!” Lee said. “Bitcoin is not going to go away in the same way the Internet is not going to go away.”
Correction: An earlier version of this article misattributed BTCC CEO Bobby Lee as the CEO of BTC.
Jason Shueh is a former staff writer for Government Technology magazine.