Last updated on June 12th, 2018
I became a bitcoin miner in 2012 in order to understand the technology and determine what value it had for the future.
While I still have my bitcoins from my early mining days I did not find that the block chain was particularly valuable.
Bitcoin has been reported and claimed to be many different things by many different people.
Some of the misleading or false claims over the years:
irreversible public ledger - no stable currency - no decentralized - no (and suffers from the 51% problem) cheap - sometimes fast - no (60 minutes for transaction confirmation) scaleable - no (7.5 transaction per second max or 20 with segwit) eliminates third parties - no exchanges - risky and costly (though not entirely bitcoin's fault)
Bitcoin in 2017 was undeniably a great speculation play. Many made millions.
But that was what it was speculation.
While many us of would like to be rich, we do not want to get there via speculation which is basically a form of gambling.
As I found back in 2012, I still cannot find any real value in bitcoin and the other crypto-currencies.
It is difficult to get any concise claims as to what bitcoin is.
Those claims that have been made I have debunked over the years.
Because the claims are easy to debunk it is actually hard to get concise claims as to the benefits of crypto-currencies.
So we get endless vague claims.
It is quite possible that the original people involved in bitcoin development really did want to create a wonderful new currency with all sorts of great and desirable properties that would free the masses from the oversight and fees of banks and the government.
But that is not what bitcoin is today, and the people involved in bitcoin today, who really affect what it is, are speculators looking for ways to make money.
At the core bitcoin is an expensive and cumbersome to operate public ledger (a written record).
It is supposed to be irreversible, that is once you write information into it, the information is there forever. This has been shown to not be true. The fact is that whomever has the most computing and network power determines what the blockchain says.
It is also supposed to be decentralized. And perhaps it was in the early days. It is growing more and more centralized with every passing day.
It was supposed to be free or very low cost to transact on. This has turned out to be false.
It is also very slow. Transaction confirmation takes from an hour to several days. And even this claim is false. Bitcoin does not offer an irreversible ledger, It offers a “probably irreversible ledger” which is quite different from what people expect from all the hype.
Can you imagine waiting and hour for your payment to be confirmed while trying to purchase a cup of coffee at the local coffee shop?
How are you going to get bitcoins to start with?
For most everyone that means a highly risky exchange with high fees. Mining is extremely expensive these days. Normal people are not going to do it.
What about transacting directly on the blockchain?
In addition to the difficulties and cost of acquiring bitcoins you will want to transact in bitcoins. Transacting directly in bitcoin yourself is quite a task.
You will need:
A good computer with 24 access to high speed internet. 150GB hard drive storage. About 3 days to download the blockchain (at the time of the writing of this article) continuous operation after that.
Then to get your transaction actually accepted into the blockchain by a miner you have to pay a fee which varies from a little to a lot. I paid 12 cents for a transfer recently, while others have paid as much as $24 (it depends on how fast you want it to be and the complexity of the transaction). And even after your transaction is in the blockchain (a few minutes to hours or days at times) it takes another hour for the transaction to be “confirmed”. (which means it is unlikely to be rolled back)
So what has bitcoin become?
Bitcoin has been taken over by people leveraging it to make money.
Are other crypto-currencies better?
Analyzing the 2800+ crypto-currencies (at the time I wrote this article) is an impossible task. I still see unending vague claims and ever changing claims.
How can a crypto-currency be “stable” if the claims about are changing on a nearly daily basis?
Maybe some particular crypto-currency will come out a winner in the end and deliver on all the promises, but to any normal person this is a speculative outcome.
What is the future of Bitcoin (or any other crypto)?
There is a lot that bitcoin does wrong as I addressed above.
Imagine someday that a new crypto coin comes along named ‘NewCoin’ that does everything exactly right: It is secure, it is easy to use, it is safe, it is fast, it scales, everyone loves everything about it.
When everyone starts using ‘NewCoin’ because it is so much better, what will bitcoin be worth?
Do you see the gamble that is inherent in crypto as a whole? If the crypto coin you have put your wealth into falls out of favor you lose everything. There are thousands of crypto coins. Which are going to maintain their value?
Bitcoin used to be 80% of the market. Now it is around 35%. Will it one day be zero? Quite possibly.
Bitcoin is at its core actually pretty simple
Click here for a very gentle description of what bitcoin really is.