Bitcoin: The Year in Review 2015

For those interested in bitcoin, 2015 has been an interesting year. It may even prove to be a critical one in the development of the digital currency, but, as usual, it has been far from plain sailing.

The price of bitcoin, as measured by the exchange rate versus the U.S. dollar (BTC/USD) spent most of the year relatively stable. After sliding to below $200 early in January, BTC/USD stayed in a $200/$300 range until the latest surge began at the end of October. Now it may not seem that a range that represents 50 percent fluctuation is not particularly stable for a currency, but coming on the back of a couple of years when ranges were measured in the hundreds of percentage points it is, as I said, relatively stable. It should also be borne in mind that BTC is new, and in a year when some emerging market currencies saw volatility of around the same magnitude the range looks reasonable.

The currency has had its share of controversy in 2015 too. The sentencing of Silk Road founder Ross Ulbricht to life in prison in June brought renewed focus on the “dark side” of crypto currencies, and the "revelation" that ISIS and other terror groups probably use bitcoin to facilitate the movement of money shocked people who hadn’t been paying attention to the fact that doing so was easy, fast and cheap as well as anonymous. At the end of the year we were once again told that Satoshi Nakomoto, the mysterious creator of bitcoin, had been identified. The quiet that has followed that news, though, along with the fact that other such stories have been run in the past and faded, suggests that this was just another false alarm.

For once, though, neither the price of bitcoin nor the scare stories surrounding it were the real news. What got much of the bitcoin community and even the mainstream media aerated was the increasing use of “blockchain technology” in trial projects sponsored by large, mainstream Wall Street firms. With the exception of the continued protestations of Jamie Dimon, big finance seems to have moved from denial and attack of anything associated with digital currency to an attempt to effectively purchase the ideas behind it. That is what big business does; if it cannot beat an idea with logic or lawsuits it uses its most powerful weapon…money.

Unlike the scare stories and pricing panic the widespread adoption of distributed ledger systems, if it comes, could be truly impactful on the long term future of digital currency. There are of course worries about Wall Street co-opting the blockchain and leaving bitcoin behind, but that looks unlikely to happen, as the currency is so embedded in the original system. It is far more likely that the added legitimacy will stimulate interest and as a result boost the growth in transactions. If those transactions continue to grow, then I guess eventually even Mr. Dimon will have to accept reality, or he will begin to sound like one of the bitcoin hating trolls that have, thankfully faded from view this year.

As I look back on the year, it is that, the change in tone of the conversation surrounding bitcoin, that gives me the most pleasure, and the most hope for the year ahead. I try, in these articles, to take a logical, reasoned position when discussing matters bitcoin, but at the start of this year that still prompted responses that were anything but logical or reasoned, and on both sides of the debate. Thankfully the trolls have mostly faded away and the continued growth in bitcoin seems to have made the proponents less inclined to see anything other than the accepted level of ideological purity as an attack. The debate has definitely improved as a result.

2015 has been an intriguing, and maybe pivotal year for bitcoin. The future is still uncertain to some extent, but increasing interest and understanding, helped by a more reasoned tone of debate and commentary give me hope that it will be bright.

The author would like to thank all of the regular readers of these pieces for their support and often fascinating comments throughout the year; long may they continue. Happy Holidays!

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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