Is it a revolutionary restructuring of the entire global economy? Or could it become the biggest economic bubble since the Dutch tulip craze?
Bitcoin soared in value in late 2016, awakening many people to the existence of the cryptocurrency. In late November, more people searched for information about Bitcoin than they did about President Trump.
The currency-trading app Coinbase, which allows users to buy and sell Bitcoin as well as two other cryptocurrencies, was for a time the No. 1 iPhone app in the U.S.
Bitcoin is also getting major backing from one of America’s most important venture capitalists. Founders Fund, the firm founded by Peter Thiel, has reportedly bought millions in Bitcoin, giving the currency a sizable boost in legitimacy.
Thiel, one of the few major business leaders to have backed Trump during the 2016 campaign, is a co-founder of Paypal and was one of the early investors in Facebook.
Bitcoin is largely exempt from government regulation and is completely decentralized, immune to control by governments or central banks. It uses cryptography for security and employs a blockchain, or “a public ledger of peer-to-peer transactions,” to verify trades, so central record-keeping is not required.
Some believe Bitcoin will grow so powerful it will transform the global economy, becoming the first universally accepted currency free of government control. Not surprisingly, leading figures on Wall Street are mostly critical of the currency.
Lloyd Blankfein of Goldman Sachs called Bitcoin “a vehicle for perpetrating fraud.” Jamie Dimon of JP Morgan called the currency itself a “fraud” and said people who buy it are “stupid.”
Bitcoin has also been slammed for enabling criminal activity and smuggling, as it can be used to purchase drugs and illegal goods in online marketplaces. Leftist journalists and anti-free speech groups such as the Southern Poverty Law Center are also critical of the currency for enabling thought crime.
White nationalists, who were mostly driven off mainstream fundraising sites following the disastrous “Unite the Right” rally in Charlottesville, Virginia, in August 2016, were largely forced into relying on Bitcoin just in time to enjoy the currency’s rapid increase in value.
The ironic result of the media’s campaign to defeat racist extremists by forcing them into using cryptocurrency was a boom in their assets.
The Southern Poverty Law Center and its allies in the media are now working to track Bitcoin donations to white nationalist groups and expose users.
But Bitcoin is not the only cryptocurrency out there. Monero, an even more secure cryptocurrency, is rising in popularity among criminals and will likely rise in prominence among political dissidents and extremist groups as well.
And while Thiel’s investment shows Bitcoin is becoming increasingly normalized and may soon become a mainstream medium of exchange, the rise of cryptocurrencies like Monero means there may be something even more important happening.
Individuals are developing ways to pay for goods and services or support marginal groups that are completely untraceable. And just when a watchdog or government gets a handle on one cryptocurrency, another one emerges, enabling users to hide their actions.