Bitcoin is in its post-usefulness phase, and that’s OK

BACK in 2013 as a reporter for The Business Times, I had the privilege of front-row seats to the early cryptocurrency gold rush in Singapore. It was a heady time. Early adopters honed in on Bitcoin, guided by an ineffable conviction that they were on to something big.

Then, even pioneers of the local crypto scene had struggled to articulate what exactly Satoshi Nakamoto’s creation was supposed to be. “It’s just something,” one of them had told me. “It’s not really a currency. It’s just something,” he added.

He hadn’t arrived at this pronouncement through lack of contemplation, but rather through an abundance of it. Think about Bitcoin hard enough, and you end up in a currency-versus-commodity mental ouroboros so perplexing that you need to go lie down.

When I spoke to local crypto adopters 11 years ago, Bitcoin was worth US$120. Now, with Bitcoin surging past the US$100,000 mark (an 830-fold gain – I did the math so you wouldn’t have to), I like imagining these fellows riding off into the early retirement sunset.

In the same 11 intervening years, the US has made little progress in its approach towards cryptocurrency. Regulation has been a contradictory and reactionary mess. Little wonder then, that crypto boosters have cheered the incoming Trump administration’s nominations in this space. Between the crypto-literate Paul Atkins as Securities and Exchange Commission chair and the libertarian-leaning David Sacks as crypto czar, the community will finally get the light-touch regulatory consistency that it has long clamoured for.

By the same token (hah!), if crypto fails to take off during the Trump era, the community will no longer have faulty regulation to blame. It will have to succeed or fail on its own merits. Trouble is, no one can agree on what those merits are.

For starters, this recent rally doesn’t make the use case for Bitcoin any more compelling. The price surge is a result of the low-tech and ancient brute forces of supply and demand, not any new blockchain development that makes crypto more useful.

But the time for flogging the “usefulness” horse is over; we are in a post-usefulness phase of cryptocurrency. In fact, the only people more tiresome than those insisting that Bitcoin is useless are those defending its usefulness. As Bitcoin sceptics and Bitcoin maximalists talk over each other, a third group – the opportunists – have bought and sold the stuff many times over. Crypto value might be illusory, but trading profit is real.

As the US re-formulates crypto regulation, it ought to acknowledge and accept the speculative primacy of this instrument. This isn’t to say that Bitcoin will never be useful, but right now, the price action and narrative have been co-opted by speculators, while the larger crypto universe crypto teems with memecoin hucksters.

There is little intrinsic value in Bitcoin for now, but people want to buy it anyway – this isn’t such an alien and repulsive concept; just ask anyone who has bought a diamond engagement ring.

The sooner we stop trying to make Bitcoin more than “just something”, the better we can regulate a market that currently largely revolves on the “greater fool” principle. When we accept that there are more fools than geniuses in this space, we will be better able to save the former from themselves.