The price of Bitcoin has skyrocketed, but in doing so it has transformed to the point where it has failed its original goal. Bitcoin was created to be the decentralized currency of the world, so there would be no need to trust banks and governments with something as valuable as currency anymore. Instead, Bitcoin is unusable as a currency. Transaction fees are so high ($7+ per transaction) that it’s prohibitively expensive to actually spend your Bitcoin on anything. Instead of using addresses or digital wallets, too many people rely on exchanges like Coinbase which basically act as a bank with normal currency. Instead of decentralizing the currency of the world, we simply re-centralized it with Bitcoin exchanges as another financial instrument, a sort of digital gold.
The problem is, 1000 people hold 40% of all Bitcoin. These early adopters have so much power to manipulate the price of Bitcoin, and yet none of them can sell any significant portion of their holdings without causing a crash. And that’s the thing: as soon as people realize the price of Bitcoin isn’t going to keep doubling every week, people will start selling and the bubble will pop.
Honestly, it’s for the better. Maybe Bitcoin will be usable as a currency again once that happens. But in my opinion, I don’t think Bitcoin in its current form is anywhere close to mature enough to be used as a real currency. Transaction fees are too high and waiting for transactions to be confirmed is unreasonably slow. I have my doubts that Lightning Network will accomplish everything it claims, but I’ll save that for another day.
Maybe eventually Bitcoin will eventually be usable as easily as a credit card. But I don’t see that coming any time soon. I think Bitcoin is simply not well-thought-out enough to ever get to that point. Ethereum is close, but still has some scale issues to work out as well.
Will currency ever be fully decentralized? I think the answer is no. Our world moves too fast for that. A decentralized currency like Bitcoin requires long deliberations and the agreement of the the majority of miners before any changes are made. I think it is much more likely that blockchain, with its use as a ledger with cryptographic guarantees, will make its way into industry, but not anywhere close to the forms you see it now.
As much as I love the theory behind cryptocurrencies, reality hasn’t caught up with the hype. I know it’s very difficult to convince people they’re invested in a bubble when they keep receiving the positive feedback of seeing prices go up and up and up, but please remember that your crypto money isn’t real money until you’ve cashed out.