The Economist gives a thumbs-down to bitcoin
The Economist magazine delivers a withering assessment of bitcoin and other cryptocurrencies in its latest issue, deeming them to be “useless” and looking like “a solution in search of a problem.
However, the venerable 175-year old financial weekly believes that “the jury is still out” on blockchain and the technology may prove to be more interesting.
Greed versus fear
This week’s edition of the magazine includes its latest Technology Quarterly, which reviews both cryptocurrencies and blockchain, references the old saying that “markets are ruled by either greed or fear” and comments that greed once governed cryptocurrencies, but fear has more recently been in charge.
Noting that bitcoin’s price has fallen back this year from a peak of over $19,000 to around $7,000, and that other cryptocurrencies have followed it lower the magazine notes: “No one knows where prices will go from here. Calling the bottom in a speculative mania is as foolish as calling the top. It is particularly hard with cryptocurrencies because there is no sensible way to reach any particular valuation.
“It was not supposed to be this way. Bitcoin, the first and still the most popular cryptocurrency, began life as a techno-anarchist project to create an online version of cash, a way for people to transact without the possibility of interference from malicious governments or banks.
“A decade on, it is barely used for its intended purpose. Users must wrestle with complicated software and give up all the consumer protections they are used to. Few vendors accept it. Security is poor. Other cryptocurrencies are used even less. ”
The Economist’s conclusion about bitcoin is that “the best-known cryptocurrency has been a failure as a means of payment, but thrilling for speculators. However, the magazine adds that cryptocurrency and blockchain enthusiasts have a point when they compare the new technology with the early world wide web and that blockchain is potentially more promising that the cryptocurrencies whose development it has supported.