The year of FUD in Perspective on the 10th anniversary of Bitcoin’s genesis block

5 min read

Happy Birthday Bitcoin! It all started 10 years ago with the notorious Satoshi Nakamoto publishing the infamous white paper (Bitcoin: A Peer-to-Peer Electronic Cash System) in November 2008. This was the theoretical idea which went on to create the pioneer Cryptocurrency known as the Bitcoin. Interestingly enough this happened right at the time of last major financial meltdown in global markets. Many are of the opinion that the high handedness, undue control and lack of transparency of the financial authorities like the Central banks, big corporate banks & regulatory authorities led to the financial disaster. The timing could be a pure coincidence or the work of “unknown forces” to bring about a change for the greater good.

The practical implementation of the Bitcoin Blockchain network (or the genesis block) went into effect on Jan. 03, 2009. Ever since then, the Crypto kingpin has faced a fair share of FUD (Fear, Uncertainty & Doubt)— referring to the spread of misleading or false information by the opponents of a project to undermine it. The continued bearish momentum in the price of Cryptos led by BTC in 2018 perhaps increased the FUD noise even further. Let’s take a look at some of the statements broadcast in mainstream media & see if the they had a sound basis or just wanted to sound right as the price continued to fall.

➤ “It reminds me of the Tulip Mania in Holland in the 1640s, and so the question is did that collapse? We still pay for tulips even now and sometimes they get expensive. [Bitcoin] might totally collapse and be forgotten and I think that’s a good likely outcome but it could linger on for a good long time, it could be here in 100 years.” – Nobel Prize-winning economist Robert Shiller (Jan. 19) 

➤ “Bitcoin has been unable to seriously address its on-chain scaling problems. Its community has alienated, marginalized, and purged dissenting voices, notably Mike Hearn, Gavin Andresen, and Jeff Garzik. Its core development team has been captured by an ideological faction committed to only off-chain scaling in the name of decentralization. This faction has undermined consensus scaling agreements and trashed the reputation of anyone who points out any of the above.” Forbes cited PH.D. economist Eli Dourado (Feb. 11) 

➤ “It is high time to end the hype. Bitcoin is a slow energy-inefficient dinosaur that will never be able to process transactions as quickly or inexpensively as an Excel spreadsheet. Ethereum’s plans for an insecure proof-of-stake authentication system will render it vulnerable to manipulation by influential insiders. And Ripple’s technology for cross-border interbank financial transfers will soon be left in the dust by Swift, a non-blockchain consortium used by all of the world’s major financial institutions.” Guardian’s highly skeptical piece (Mar. 5)

➤ “The year is two-thousand-something-big, and it’s the day your taxes are due. But you don’t file them. Instead an algorithm automatically makes a withdrawal from your electronic wallet, in a currency called Fedcoin.” MIT Technology Review (Apr. 24)

➤ “Bitcoin is probably rat poison squared.” – Warren Buffet (May. 5)

➤ “Indeed, eight years after Bitcoin was launched, cryptocurrencies have made very few inroads into actual commerce. A few firms will accept them as payment, but my sense is that this is more about signaling — look at me, I’m cutting-edge! — than about real usefulness. Cryptocurrencies [sic] have a large market valuation, but they’re overwhelmingly being held as a speculative play, not because they’re useful as mediums of exchange.” Times author Paul Krugman (Jul. 31)

➤ “Users must wrestle with complicated software and give up all the consumer protections they are used to. Few vendors accept it. Security is poor. Other cryptocurrencies are used even less.” The Economist (Aug. 30)

➤ “The virtual-currency mania of 2017 — fueled by hopes that Bitcoin would become “digital gold” and that blockchain-powered tokens would reshape industries from finance to food — has quickly given way to concerns about excessive hype, security flaws, market manipulation, tighter regulation and slower-than-anticipated adoption by Wall Street.” Bloomberg (Sep.12)

➤ “Decentralization in crypto is a myth. It is a system more centralized than North Korea: miners are centralized, exchanges are centralized, developers are centralized dictators (Buterin is “dictator for life”) & the Gini inequality coefficient of bitcoin is worse than North Korea.” American economist Nouriel Roubini (Oct. 7)

➤ “Nothing on the Bitcoin label turned out to be in the bottle. As a means of payment, it is cumbersome, volatile and expensive. It has destroyed value rather than storing it. Its decentralized technology was sold to investors as being unique. It has been anything but.” Bloomberg (Nov.21)

➤ “In the end, the Bitcoin bubble may have been a net good for society. The total amount of wealth involved — a few hundred billion dollars, spread out around the globe — was small compared to the 2000s housing bubble or the 1990s dot-com bubble, meaning the pain will be limited. And the experience of such a classic, perfect financial bubble may be sufficient to teach the millennial generation what their forebears learned much more painfully — if something looks too good to be true, it usually is.” Bloomberg (Dec. 11)

While there is some merit to the criticism that the technology surrounding the Cryptocurrencies namely Blockchain got overhyped too quickly with the skyrocketing prices of the digital coins in 2017, the harsh criticism from the media & the “experts” is not entirely warranted – Case in point Warren Buffet, the most prolific investor of all times has also been cited as saying that he regrets not investing companies like Amazon & Google. Wonder how good is he predicting the effects of game-changing technologies?

Similarly MIT technology review, who was vehemently looking at a U.S government take over of the Bitcoin (last April) with its own digital version called Fedcoin has come out with an article published in the New year saying that Blockchain/Cryptos will get mainstream adoption as the hype around them has settled down & also some innovative projects are still alive with institutional interest gaining traction. Basically summing up with a positive spin all things Crypto & Blockchain. Just goes to show, how opinions can mold & reshape in a small amount of time.

Bloomberg has been a pretty sound critic of Cryptos more recently by equating the price drop of Bitcoin & general Crypto assets with dot-com bubble of 2000. What it fails to take into account is the fact that tech giants like Google & Amazon emerged from the ashes of the same bubble burst to become game changers of the ongoing tech transformation. And the case is pretty similar here as well – while there were a lot of scammed projects which were launched under the auspices of the whole Blockchain/Crypto movement, the price downturn & move towards effective regulation have flushed out these bad players leaving viable, focused & practical projects alive. Technology is an iterative process & it takes time to identify & address the issues. Just compare the internet access model of early 90’s to what it is today.


Regarding the general criticism about decentralization, privacy, scalability, regulation & adoption etc. it is noteworthy to take note of the following developments:

➥ Although the funding for Crypto projects has declined in 2018 as compared to the 2017, it has maintained healthy levels not replicating the price crash in the digital assets.

➥ While the U.S SEC has rejected 9 ETF applications, they have yet to turn down the most anticipated application by by investment firm VanEck & financial service company SolidX, delaying the decision till Feb. 27, 2019 – reiterating the fact that while they are cautious about approving an ETF, they don’t want to choke the innovation spirit.

Nasdaq (second biggest stock exchange) announced the listing of Bitcoin Futures in the first quarter of 2019, while ICE (parent company of NYSE) has reiterated to launch the Bakkt Futures on Jan. 24, 2019 pending regulatory approval.

➥ International Monetary Fund Chair Christine Lagarde recently cozied up to the idea of Central banks issuing their own digital currency. This is a 180-degree turn from what the monetary authorities have been thinking & saying about digital currencies recently, nevertheless, a welcome development.

➥ Lightning Network (LN) – the sidechain scalability solution for Bitcoin broke another milestone when the capacity increased to 4,000 nodes with a volume of 460 BTC in December. This is an impressive feat from the 50 nodes at the time of launch in January 2018. The Blockstream Store  acts as a real-world micro transaction use case for the faster & cheaper bitcoin payments enabled by Lightning network protocol layer.

Rootstock Protocol – is a smart contract solution for Bitcoin which provides features like scalability, security, instant payments & portability among others.

Liquid sidechain – is a permissioned federated blockchain which is ideal for high volumes & large transactions targeting large financial institutions. The sidechain offers faster trading, enhanced efficiency, verifiable sidechains, better privacy & improved reliability.

Dandelion Privacy Protocol – is a simple network layering solution which can be seamlessly integrated with the current blockchain networks most notably with Bitcoin blockchain to improve the privacy of the network drastically.

➥ The past year has seen addition of innovative trading products for Bitcoin in particular & Crypto assets in general – Bitcoin ETN, Bitcoin Futures, Crypto ETP & Crypto Derivatives all of which have contributed towards the growth of institutional interest in digital assets.

Other Crypto projects like Ethereum, Ripple, EOS, Cardano, TRON & Stellar etc. have come up with their own improved solutions for their main nets as the Cryptoverse continues to evolve. If you ask me everything around the Crypto movement improved except the price. Maybe 2019 will be the year when it begins to catch up?

The whole purpose of this piece was not to validate one point of view or the other but to present a fair comparison between what the naysayers are saying about digital assets & what has actually transpired in the past 12 months. What’s your take on it?

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Faisal Khan Faisal is based in Canada with a background in Finance/Economics & Computers. He has been actively trading FOREX for the past 11 years. Faisal is also an active Stocks trader with a passion for everything Crypto. His enthusiasm & interest in learning new technologies has turned him into an avid Crypto/Blockchain & Fintech enthusiast. Currently working for a Mobile platform called Tradelike as the Senior Technical Analyst. His interest for writing has stayed with him all his life ever since started the first Internet magazine of Pakistan in 1998. He blogs regularly on Financial markets, trading strategies & Cryptocurrencies. Loves to travel.

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One Reply to “The year of FUD in Perspective on the 10th…”

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