“The horse is here to stay,
but the automobile is only a novelty—a fad.”
—A 1903 bank president still turning over in his grave today
Whenever there are technological improvements, there also are naysayers who doubt their efficacy. The same is true when it comes to blockchain and cryptocurrency. As skeptics continue to predict blockchain’s demise, the industry reports record growth year-after-year.
While there have been setbacks, it seems like blockchain is for at least for a little while. So here are some of the most ridiculous quotes about blockchain and a better prediction about the future of the technology.
“Bitcoin isn’t a currency. It’s a Ponzi scheme for redistributing wealth from one libertarian to another.” —Washington Post
This view, that blockchain is based on a digitized pyramid scheme, seems to stem from the fact that the technology removes the middleman—a.k.a. the bank—in an attempt to redistribute wealth. However, this view couldn’t be further from the truth.
Blockchain is an encrypted, digital, decentralized ledger that records virtual transactions. Through blockchain, users can buy, sell, process and record financial transactions without using a bank or any other central clearing authority. This lowers transaction costs and makes it more affordable for people to invest in the cryptocurrency market.
“So, That’s the End of Bitcoin Then”—Forbes, 2011[
The mere fact that we are talking about blockchain technology today, demonstrates that this prediction failed to meet the mark.
In 2017, the cryptocurrency market expanded significantly, reaching a market capitalization of over $700 billion. While there has been retraction since that time, new companies, investors and countries regularly enter the blockchain marketplace, with no end in sight.
“The currency [bitcoin] isn’t going to work. You can’t have a business where people can invent a currency out of thin air.” —Jamie Dimon CEO JP Morgan
This statement would make sense, except that… most modern currencies are not back by tangible commodities. The US dollar hasn’t been backed by gold or silver since 1934. Instead, agency and government-sponsored securities provide the collateral for US currency. A security represents a share of ownership and is a legal concept that someone created. It’s just that securities have had the benefit of hundreds of years of use as financial instruments, while cryptocurrencies have only been available for a handful of years. Despite the current volatility of the market today, it is likely that people will not care that cryptocurrencies were invented “out of thin air” in the future, either.
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Who is Scott Levine?
Scott’s practice is dedicated to assisting entrepreneurs, investors, emerging and established businesses with the unique and often challenging issues they meet throughout the formation and growth process: from entity formation, to the management of founder relationships and economics, to the protection of intellectual property, to the financing of growth and navigating securities law compliance. He assists clients as they continue to grow and develop, whether this involves merger and acquisition activities, international licensing and distribution arrangements or counseling of directors and officers.
Scott is chair of the firm’s Securities practice. His practice is focused on advising a wide range of clients on SEC matters, securities transactions and corporate governance. He represents issuers, investment banks / financial intermediaries and investors in financing transactions, including public offerings and private placements of equity and debt securities.