1,000 Bitcoin Wallets Won't Replace One Financial Revolution

John Biggs is CEO of stealth bitcoin startup Freemit and a former editor at TechCrunch. His work has appeared in publications such as The New York Times, Gizmodo and Men's Health.

In this opinion piece, Biggs argues that the bitcoin community has become complacent in its quest for financial change, standing by as institutions seek to stamp out its revolutionary impulses.

You say you want a revolution. Fine. But act like it's coming, not like petulant nerds intent on destroying a burgeoning industry from the inside.

At this point in the bitcoin lifecycle, the fear, uncertainty and doubt (FUD) and naysaying we've been hearing is mostly true. The network is abysmally slow. The use cases are half-baked and consumers will receive no implicit benefit from bitcoin over, say, swiping their Visa card.

The bitcoin 1.0 experiment is, in short, over.

But, I would argue – and you will probably agree – that bitcoin and related technologies aren't an experiment any more than TCP/IP was an experiment or HTML was a shot in the dark. Just as the first web pages looked ugly as sin, the current state of bitcoin is in the same position.

These technologies point the way to the future, but we're letting that future be controlled by those who will be quickest to destroy it.

Death by distraction

Transferwise, Revolut and the banks with their "blockchain-like contracts" are sucking up the oxygen necessary to go forward with a true Internet of Value.

While we dick around over block size and who is angry at whom, the powers that be are quickly and mercilessly tearing into everything that we have worked hard to build.

I have watched this industry move from "To the moon!" optimism to a world in which big banks pay lip service to [bitcoin creator] Satoshi Nakamoto even as they strip out the best parts of his work for themselves and leave the "uncertainty" to the idiots who still believe bitcoin is a currency.

At the same time, incumbent FinTech plays have gotten into bed with banks and are attempting to replicate bitcoin's benefits through financial trickery and loss-leader tactics.

False hopes

Then, there are the bitcoin 1.0 companies, the dozens of startups that are nothing more than another crypto wallet.

They’re basically software layers that allow these companies to route around regulation by claiming to be software solutions.

Bullshit. These companies need to put up or shut up.

In short, there are banks who are working hard to steal our ideas and nervous CEOs who refuse to release real products humans can use. Old-timey bitcoin companies are clamoring for the world's focus even as they fumble the ball when it comes to general bitcoin adoption.

Why are we letting them?

I'm all for happy cooperation between existing financial institutions and bitcoin. This is imperative to move forward.

If big banks want to hire blockchain consultants who will work on routing around the potential damage bitcoin can cause to their fee structure until enough of the old guard retire and enough intelligent blockchain users replace them, then that is just fine. The Internet of Value will be waiting for them.

But the longer they wait the longer they will spend money on Quixotic tools because they are afraid.

Old lessons

I'm reminded again and again of a story my friend Roy told me about his experience with the early web. In about 1999, he was tasked with maintaining Web filters for a South Korean company.

The filters cut out everything, from external email to porn. But they kept failing. He would come in every week and find that the filters were literally burning up – all of the porn was burning the filters. He'd order a new server, install it and a week later get another call.

After a few servers burnt out, he'd get a call every few days. Then once a day.

Seoul at that time was far ahead of the US in terms of web access, and users were watching TV, downloading data and communicating in ways that we hadn't yet dreamed of online. And filters were needed, obviously, to keep workers from connecting with the outside world.

The filter was designed to keep the users from cyberloafinghttp://www.siop.org/Media/News/loafing.aspx. But the filters actually just caused more downtime, frustrated more connectivity and prevented people from doing real work.

A company that filtered the Internet in 1999 was considered cautious. A company that filters the Internet today is considered dumb.

Power to the people

The same will happen with "blockchain-only" plays. And that's fine.

After a few dozen servers fried, Roy's client said to stop installing filters. Citibank, Credit Suisse and American Express will stop filtering bitcoin.

When that happens you'd best buckle up. This technology isn't going anywhere. But we must decide where we want it to go.

If we, as a group, want to lose this technology to the current banking powers that's fine, but be prepared to see bitcoin and other cryptocurrencies fail. If we want to work together with banks to our mutual benefit, then I can see good things ahead.

If we want to wrest control back from the banks and wage civil war between former allies, then good luck.

Linux won because of two things: the rabble – I include myself in this because I was playing with Mandrake Linux back in 2000 – took hold of it and forced it forward so corporations could recognize its power and kept the untrammeled infighting in check.

Open-source folks could play in their own sandbox and create amazing flights of programming prowess while Red Hat said "Hey, this makes for a great web server. Why don't we replace Solaris with it."

It was this push/pull that turned open source into a real threat and, in the end, forced Microsoft to port SQL Server to Linux.

Time for action

The revolution has begun.

It's not a revolution that many have noticed and, even with all of our bluster, it can still fail. But let's not let it.

There is no upside to abandoning one of the most unique and potentially life-saving financial technologies in the world, but there is also no upside to ignoring the problem of slow-moving major players, a petty user base that sees conspiracy in every Reddit post and bankers who chortle at blockchain in public and invest millions into it in private.

You say you want a revolution. Make one.

Patriotic statue via Shutterstock