5 years ago a prominent Silicon Valley venture capitalist bet a financial journalist a pair of Alpaca socks that by now at least 10% of the US public would be using Bitcoin to buy stuff on a regular basis.

Who won the bet?

A few weeks ago, VC Ben Horowitz and the disbelieving journalist Felix Salmon got together on NPR’s Planet Money podcast to settle the bet.

It turns out that according to a poll commissioned by the podcast, no more than 3% of US adults are using bitcoin today. The VC graciously admitted he had lost the bet.

Does this mean we can write-off Bitcoin and digital money in general as a noble but failed experiment?

Bear in mind that Ben is a highly respected VC and with the firm a16z were early investors in Skype, Facebook, Airbnb and Twitter. Ben and his colleagues continue to invest millions via their crypto fund.

Ben was quick to restart the bet albeit with 2 tweaks: by widening the scope to cryptocurrencies in general and by shifting the focus to Mexico as a developing economy.

Is Bitcoin dead?

I tend to agree with Ben that Bitcoin is here to stay and represents a huge opportunity for many.

Why do I say this when so few are actively using Bitcoin in their everyday lives and the public at large see it as a haven for money launderers and speculators?

It’s been barely 11 years since the mysterious Satoshi Nakamoto published his (or her) seminal whitepaper on Bitcoin.

Over that time Bitcoin has spawned hundreds of other cryptonetworks. You can think of a cryptonetwork as the basis for an emerging economy that happens to be digital, decentralised and global.

The idea is that over time cryptonetworks provide the protocols and infrastructure for many organisations to thrive by offering products and services that rival or surpass those we see today.

Decentralisation is the key

These are still early days and many of the cryptonetworks that have emerged so far are scams and will fall away.

Many other initiatives have been to co-opt the underlying blockchain technology in an attempt to build faster horses. This has generally been the approach taken by incumbents such as the legacy banks. Ripple anyone?

The key however to unlocking the greatest opportunity for the most people is the way cryptonetworks enable us to build and operate systems, services and products that are truly decentralised.

A common misconception is that Bitcoin is exclusively a libertarian’s dream. While this is understandable cryptonetworks are also a powerful lever for those who think of themselves as progressive.

As Alex Gladstein says:

Bitcoin is a similar phenomenon to democracy and the Internet, technologies which respectively smashed the tyranny of political power and corporate control of knowledge. Through democracy, citizens are able to check the power of kings and dictators, and through the internet, citizens outside of the government and the richest classes are now able to have a strong public voice and have unfettered access to all of the world’s knowledge. In the same way, Bitcoin will break the government and corporate monopoly on money.

The enabling mechanism common to democracy, the internet and Bitcoin is decentralisation. Decentralisation of power, knowledge and money.

Do we really want to sheep walk down the track where a single entity (corporate or government) controls you because it knows more about you than you do?

Bitcoin and other (good) cryptonetworks offer the opportunity turn the tide. To swing the pendulum away from centralised control over our lives.

Are we there yet?

There has been very little correlation between the price of crypto assets including bitcoin and progress on building out the infrastructure for this brave new digital, decentralised world.

Understandably, the public are not yet ready to embrace digital money and are barely aware of the wider opportunities. And yet much has been achieved at a technical level.

Bitcoin has ignited an unstoppable global movement of thousands of smart developers and entrepreneurs fuelled by passion and 100s of millions of investment dollars.

According to Upwork, Blockchain development was the fastest-growing in-demand skill in 2018 for freelancers, up 6,000% year-on-year. Meanwhile LinkedIn reported demand up 33x year-on-year.

Investment by traditional and crypto-dedicated VC firms doubled in 2018 over 2017 in terms of number of deals and total funding. At more than $10 billion, this is more than 10x the level of investment in 2014.

No surprise then that the crypto-movement has spawned 100s of new cryptonetworks and is making rapid progress on creating the necessary building blocks in areas like security, identity, storage and distributed computation.

Meanwhile the legal and regulatory landscape is starting to take shape. This will further boost the movement by lending it credibility among the public and curbing its worst excesses.

Make no mistake, the foundations are being laid for a potential transformation of society on a scale that few can imagine right now.

Photo by Viktor Forgacs on Unsplash