Has Bitcoin Fizzled?

Jeff John Roberts posted the other day for GigaOm on Cirle’s hiring of a high level banker, Paul Camp. He starts off this way

Bitcoin is passé to many in the tech world these days …

Mr. Roberts means to say that despite the passage of time, bitcoin has failed to develop mainstream products and so is on the way “out”.  It is not “hot”. Instead, it is more like “cold fusion” — something that sounds amazing but is juts beyond our reach.

Is he right? He is right that bitcoin is not yet mainstream for the average person on the street. We don’t all have bitcoin wallets. And those that do, do not use them on a daily basis. And this may not happen. But that misses the point by a country mile.

The point is that transaction fees can be reduced with bitcoin. It is obvious that the institutions that charge transaction fees – mainly banks — don’t like this. They are perfectly content to charge these fees and make lots of cash. But sooner or later, folks will find a way to avoid transaction fees whether banks like it or not.

And there is a broader point. Blockchains make distributed networks efficient. This idea goes beyond reducing transaction fees. It reduces our dependence on centralized authority to maintain a flow of information. This is a complex idea that very few people understand at this point in time. For that reason, it will filter into network design slowly.

So while bitcoin wallets are not in daily use yet, I think that Mr. Roberts needs to keep his trousers on. The effects of this technology will be felt over time. Need an analogy? Well, consider the automobile. It was one of the most disruptive technologies of the 20th century. But it did not take off right away. It took the genius of Henry Food and then Al Sloan to bring the automobile into mainstream use.

 

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