There’s a fantastic article in Wired this month about The Rise and Fall of Bitcoin.
It’s a great read and a well-written article, but reading it one gets the sense that Bitcoin failed, and all of the P2P currency experiment has failed with it. Paul Krugman dismisses it, a consultant calls it a pyramid scheme, the author concludes that “beyond hardcore users, skepticism has only increased”.
That may be so for Bitcoin, but isn’t there a precedent to this with other big ideas on the web? Didn’t it take Friendster breaking new ground and then failing in order to bring us MySpace, and ultimately Facebook? (I say “ultimately”, but FB is less than ten years old – it could easily flame out and be replaced by a hardier version of it in the next several years). Didn’t it take Napster, then Gnutella, then Kazaa etc etc etc to arrive at the hardened, shutdown-resistant BitTorrent for file sharing? (Not to defend BitTorrent – I don’t use it, feels gross to me, but I use it to make a point).
Reading the article, I feel like the unmistakable conclusion, which the author doesn’t make, is that Bitcoin failed, but in doing so it blew a gigantic hole in the concept of money, broke a lot of new ground, and that new ground is bound to be claimed by some other player in the next few years one way or another. Some Mark Zuckerberg of bitcurrency will emerge, tweak the Bitcoin model to fix the problems that destroyed it, and we’ll have the biggest currency disruption the world has ever seen.
This seems inevitable, does it not? People have played with the concept a few times, and gotten it wrong. But that just exposes where the potholes are for the next guy coming along. The idea is only a few years old. Give it another few iterations, and someone is going to get it just right.
(If you want to read some interesting comments on Bitcoin and the possibilities for P2P currency – as well as lots of derision – check out the comments in Paul Krugman’s article on it from September.)