On August 30th, financial publication The Economist published a somewhat scathing article in which the shortcomings of cryptocurrency thus far were glaringly highlighted.
In the article, the very speculative and unpredictable nature of cryptocurrencies is highlighted – with a particular focus on bitcoin. It is mentioned, however, that “It was not supposed to be this way,” – a sentiment many in the crypto-community will also sympathize with: the ‘grandfather’ of cryptocurrencies was intended to be a digital form of currencies as we know them, an exchange medium, a store of value and a unit through which we are able to account.
Many will find it unfortunate however, that lackluster adoption by merchants, security concerns and in some instances, usability for individuals who are less technologically astute and/or lack access has played a key role in keeping cryptocurrencies locked within a highly volatile realm of speculation.
Blockchain, Not Bitcoin
As for the underlying technology – blockchain – The Economist opted out of an outright dismissal.
Instead, the article labels the tech “over-hyped” – arguing that the idea that blockchain technology would streamline many processes, from bank transactions, to the provenance of medication, to counterfeit-proof refugee identity documents, were chiefly claims promoted by speculators who sought to reap benefit from blockchain assets.
Citing the limitations of distributed ledger tech, it was noted that entities like SWIFT and Stripe, both operating in the finance sector, had shelved their blockchain-related projects due to an uneven scaling of input versus output (cost vs benefit).
Claire Hughes Johnson, the COO at Stripe, in July explained the digital payments company’s pullout from its blockchain effort as being motivated by the slow clearance time of Bitcoin transactions.
Hughes Johnson did not stop there, as she also questioned whether bitcoin had any real-world uses apart from being a medium of exchange for cyber criminals, adding that “The killer app for Bitcoin out there today is ransomware/”
Her views for the future of blockchain ran along similar lines to her predictions that blockchain will not breach the mainstream in the next 10 years, adding:
I do think we’ve reached that jump the shark moment where you just say ‘da-da-da blockchain.
The article does relate however, that all is not lost for cryptocurrencies and the blockchain foundation they’re built on.
Blockchain technology still has a chance to prove its worth, the article concludes – noting how IBM’s SVP of Global Industries, Platforms, and Blockchain at IBM, Bridget Van Kralingen, believes that the technology is already doing well at the company in identity verification, supply chain and cross-border transactions.