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bitcoin you say? Bah, humbug!

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I’m not saying I’m always right. In fact, I love it when someone points out I’m wrong, and shows me why, because I learn something. So, I was particularly interested when in Sunday’s Guardian, I saw the headline Blockchain: hype or hope.

It’s quite a good article, and talks about use cases in voting, provenance and finance. But in the middle was a quotation from author David Gerard stating that he hasn’t seen any real use cases for blockchain.  This intrigued me as he’s written a book about it: Attack of the 50-foot Blockchainand so I downloaded a sample of the book and scanned it to see what he was talking about. It seemed to be just a general rant against bitcoin. This doesn’t surprise me as most people are anti-bitcoin as they see it as anti-establishment, which it is in many cases. I’m personally neither for or against bitcoin. I don’t personally believe in its long-term viability and regularly say that I am waiting for bitcoin 4.0, whatever that may be. That version will have low energy usage, high volume scalability and will be incredibly cheap. Those three features are what current bitcoin lacks and, until it overcomes those technical challenges, it will never succeed.

However, does David really believe that the underlying technology has no use? And does he truly believe that the massive number of cryptographers, technologists and libertarians who believe in Puertopia, won’t work hard to overcome these technical drawbacks?

As people know who read my blog I think blockchain or, more correctly, distributed ledger technology (DLT) has massive potential to transform our planet but:

(a) it has to do it in a way in which the technology is robust and not experimental (most of today’s DLT is research);

(b) we have to work out what the cart looks like before we attach the horse, by which I mean that most DLT use cases that will have major impact such as digital identity schemes, require government to business to finance agreements of standards and structures before we apply the technology, not after; and

(c) there are almost 2,000 cryptocurrencies out there, along with several million more developers involved in proof-of-work and ICOs; it is obvious that so many developments and launches will not succeed, but many are doing work with great pride, focus and honour. The fact that a few bad actors exist – maybe 1 in 10 of the millions involved – is because where there’s money, it attracts greed (the FOMO mob) and crime so yes, of course there are a few Ponzi schemes and underworld players involved, but it’s not everyone.

In fact, this last point is the one thrown and the whole bitcoin community all the time, yet it is not true. Most criminal activity goes on with cash or other cryptocurrencies, as bitcoin is not anonymous, and most bitcoin activity is clean and honourable. In fact, a recent study found that a grand total of 0.61% of all Bitcoins around the world are used for any sort of criminal activity with Europe having an unusually high rate of illicit transactions, at 0.77%, while North America had a much smaller rate, sitting at 0.26%.

Equally BBC’s Panorama recently dedicated a whole programme to bitcoin, with the best bit being this bitcoin explainer which, for me, is one of the best I’ve seen to date:

What I think we’re seeing is just a lot of grumpy old folks who don’t like change dissing cryptocurrencies general, and bitcoin specifically, without really understanding it well enough. In fact, in another article in the weekend’s Guardian about the boomerang generation, who are children that have left home to go to university and then, god forbid, come back home afterwards because even though they’re working, they are overloaded with student debit and cannot afford to rent or buy a home as it’s so expensive these days.

The article mentions research on the brain by two American psychologists, Mara Mather and Susan Turk Charles, involving tests on people up to the age of 80. Results indicated that as we get older our fight or flight-dictating amygdala reacts less to negative information. In other words, we some more good in everything. Young people are the opposite, they see more negatives in the world. That is why younger people want to change the system, whilst older people want to keep the system just as it is.

I’ve referred to this often as, when I’m looking at the future, I always look to teenagers and the under-30s to see what they think is right and wrong with the world. Equally, I often talk about FinTech as being like a parent-child. Finance wants strong and stable institutions and systems; technologists want to change the systems so that they are always progressing to the next generation and, particularly with technology, they believe they democratise everything.

This friction of strong and stable and challenge and change is exactly what I see with FinTech, with cryptocurrencies and with technology overall. The young are changing the world with technology and the old don’t like it. Tough.



Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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