Last week, an article was published in the MIT Technology Review with an extremely provocative headline, titled:
“Let’s Destroy Bitcoin”
…And it caused quite a stir – the media began drawing up news alerts, publicizing how some “MIT professors” were planning to sabotage the world’s most popular cryptocurrency.
As exciting as “killing” a currency sounds in a headline, the actual article was much more pedestrian.
The MIT Technology Review is owned by MIT, but the editorial section (where the article was published) is NOT a part of the university. This means that anything written there is not representative of MIT or its professors.
The article wasn’t written by an MIT professor either, nor was it even edited by one.
In fact, not a single MIT staff member had anything to do with the writing of it.
The article was part of the Technology Review’s special issue that focused on crypto, blockchain, and how the technology will change in the future.
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The editor of this issue wrote a letter titled “A Technology in Turmoil”, where he mentions, “a casual reader of the news might be forgiven for thanking that Blockchain mania is over.”
Then he introduces “Let’s Destroy Bitcoin”, prefacing the article with the following statement, “Morgen Peck draws out three futuristic scenarios in which Bitcoin, the original and still the biggest cryptocurrency, might become irrelevant, supplanted by rivals.”
So really, all the article presents is three hypothetical (and unlikely) scenarios in which Bitcoin will be devalued. It NEVER calls for the death of the cryptocurrency like the headline would have you believe.
The first scenario, one I get asked about frequently, involves a government takeover of Bitcoin and the creation of “Fedcoin”, a cryptocurrency backed by the Federal Reserve:
“The year is two-thousand-something-big, and it’s the day your taxes are due. But you don’t file them. Instead an algorithm automatically makes a withdrawal from your electronic wallet, in a currency called Fedcoin”
Other financial gurus out there would have you believe that an upcoming G20 meeting in July will result in an outright ban of cryptocurrency, and the creation of a state-backed coin.
This is a concept that has gained traction over the last several months, and Bitcoin bears love to repeat it – as if it holds any water.
The intent with messages like these is to discredit crypto and promote traditional investments, investments that the “old guard” of Wall Street hold on to dearly.
The upcoming G20 summit does indeed have a “set deadline” for cryptocurrency regulations, but it is not to ban crypto outright nor take steps towards doing so.
In late March, Argentina Central Bank chair Frederico Sturzenegger said, “In July we have to offer very concrete, very specific recommendations on, not ‘what do we regulate?’ but ‘what is the data we need?'”
The focus will be on fact-finding and creating a structure for all G20 member nations to follow when it comes time to responsibly regulate crypto.
The main concern over crypto is its use in illegal activities, not necessarily the risk of a “financial collapse” like many arm-chair economists repeat endlessly as a criticism of digital currency.
Bank of England head Mark Carney, head of the G20’s Financial Stability Board, agrees that “crypto-assets do not pose risks to global financial stability at this time.”
Even the head of the IMF, Christine Lagarde, sees crypto as a hugely beneficial technology and cautions central banks to be careful of stifling innovation by over-regulating.
Everything else that is being said about Fedcoin is pure speculation. If it ever is created, we are many, many years away from it actually happening.
Moreover, if the governments of the world decide to ban crypto outright (which is highly unlikely), it will be nearly impossible to enforce.
The second scenario discussed in “Let’s Destroy Bitcoin” hypothesizes that it could be dethroned by social media websites creating their own currencies, rewarding users with crypto for clicking on ads.
The last, and most likely scenario proposes that there will be thousands of new cryptocurrencies created in the future, all with features that are superior to what Bitcoin currently offers.
I would not be surprised to see Bitcoin eventually become less popular, but just like these other scenarios, it will be a long time before this happens.
Bitcoin still controls a clear majority share of the market, and I don’t see that changing any time soon.
Especially when it’s starting to make a run back up for the foreseeable future, eyeing a new all-time high along the way.