Bitcoin in the Headlines is our weekly look at bitcoin news, analysing media and its impact.
Itâs the classic philosopherâs dilemma, the chicken and egg. Which came first? And how do you make sense of being stuck in that unknowing middle?
For the media and the general public, debates in the bitcoin space are often muddled in the same confusion â âCan you have the blockchain without bitcoin?â âIs the protocol safe even if bitcoin businesses are not?â and âWho made this thing anyway and why canât we ask them?â
Such is the struggle of making sense of a technology that seems to have emerged as a fully formed chicken in the financial barnyard.
But, while itâs natural that the media are out for their answers to these questions, this weekâs reporting illustrates how the search for answers is often betrayed by lifeâs complexity.
Perhaps bitcoinâs biggest chicken-and-egg debate was revived earlier this week following Nasdaq OMXâs announcement that it would begin trialing how bitcoinâs blockchain could be used to help transform the way shares are sold and traded.
Banks and other international corporations are increasingly willing to adopt âblockchain technologyâ, while openly dismissing bitcoin. In doing so, they often fail to notice â or admit â Â the digital currencyâs co-dependency with its ledger.
In a Wired piece, titled âBitcoin May Never Make It to Wall Street, But Its Tech Willâ, author Cade Metz, began by citing James Angel, a professor of finance at Georgetown University who compared bitcoin to MySpace.
The comparison to early, but failed, social networks is not new. But, it served to drive home the message that some pundits are not yet convinced that bitcoin is anything more than an inherently flawed first iteration of a distributed public ledger.
Unsurprisingly, this mixed message from Nasdaq was attacked by non-profit bitcoin advocacy group Coin Center, which noted that bitcoinâs ledger requires a healthy currency to operate.
Still, Angel spoke about the need for distributed ledger technology to perhaps provide increased privacy, illustrating why there continues to be a drive to discuss âblockchain technologyâ more generally.
The strongest and most widely used distributed ledger today happens to be bitcoin, but many investors, Angel noted, prefer to keep transactions private. As such, attributes might exist that necessitate the rise of other blockchains, or distributed ledgers, he argued.
Bitcoinâs supporters, in turn, will have to keep advancing the argument that its ledger is best-suited to become the most widely used.
Liz Peek, a former Wall Street research analyst and the first woman to become a partner of a Wall Street firm, took a somewhat pessimistic stance on the technology this week.
Detailing bitcoinâs flaws in a Fiscal Times piece, she arguably confused the bitcoin protocolâs safety with that of the businesses operating with the technology.
Peek is by no means alone in doing so.
Questioning Wall Streetâs and the governmentâs desire to legitimise the digital currency in the eyes of consumers, Peek wrote:
âAt at time when âcybersecurityâ has become an oxymoron, why is our government joining with Wall Street to greenlight bitcoin? The virtual currency, rocked by serial scandals and failures since its invention in 2008, has taken on new life as financial officials roll out regulations to govern the cyber cash and banks invest in its future.â
She continued: âBy requiring bitcoin exchanges to register and granting them legal status, the government is signalling to users and backers what may prove an unrealistic promise of transparency and security. ⦠At least, regulators need to affix flashing red warning lights to every bitcoin undertaking: consumers beware.â
Peekâs reference to regulation, it soon became clear, followed on from itBitâs announcement that it had received a trust company charter.
A timely news story, no doubt, but the misleading information just kept on coming, as Peek continued her crusade against bitcoin, citing a an MIT Technology Review article which said that academics had spotted flaws in Nakamotoâs math, enabling âcheatsâ, concluding:
âHigh risk isnât a completely incorrect definition of bitcoin right now,â said Peek. âAnd yet, not only are regulators lending bitcoin legitimacy, Wall Street heavyweights have virtually guaranteed it.â
Peekâs story also referenced the ongoing mystery surrounding Satoshi Nakamoto, the author of the bitcoin white paper, a subject that was further attacked by Nathaniel Popper this week.
Writing for the New York Times, Popper outlined evidence to suggest that Nick Szabo, the noted cryptographer, was quite possibly behind the digital currencyâs creation.
âMr. Szabo is nearly as much of a mystery as Satoshi. But in the course of my reporting I kept turning up new hints that drew me further into the chaseâ, he noted.
The resulting piece relays a conversation between Popper and Szabo, that while inconclusive, provides an interesting look at the reclusive cryptographic and his continued work in the bitcoin space.
Neither Peek nor Popper are the first to delve into bitcoinâs originâs in an attempt to decipher the identity of its mysterious creator â or creators, or to point to the mystery as one of the technologyâs shortcomings.
Though an intriguing narrative, however, such storytelling may get in the way of the more compelling reality. Propelled by big players like Nasdaq, bitcoinâs chicken-and-egg issues are well on their way to an aisle near you.
This report was co-authored by Pete Rizzo.
Newspaper image via Shutterstock
