Bitcoin has a rich history — much richer than the past few years of FinTech stories on the market might allude to; stories that have nothing to do with the “bitcoin baron,” a pirate and the Silk Road, or even Mt. Gox.
But to understand how bitcoin has become the digital currency phenomenon that it has today, it has to begin with bitcoin’s history.
It’s a history, like most, that has a dark side as well as its breakthroughs — that is intended to inspire visions of changing the way money is sent from one party to another, via the blockchain.
And to help tell the story of the history of bitcoin, New York Times reporter Nathaniel Popper dug into what he discovered to be quite a fascinating tale of how bitcoin came to be and how the very concept of bitcoin is spurring conversations about creating a “new global money for the Internet age.” In his book, “Digital Gold,” Popper dives into the insider conversations about the digital currency — which includes the “misfits and the millionaires trying to reinvent money.”
“The more I got to know the people who were involved in driving this technology from different directions, the more I realized that it sort of tapped into some deep stuff about money and people’s thoughts on finance and technology,” said Popper, who admitted that even he — who had been reporting on bitcoin — had thought the concept was a bit “faddish.” But once he met the players who kept the bitcoin wheels moving, the basis of his book clicked.
The Big (and little) Players Behind Bitcoin
Popper sat down with notorious bitcoin criminal Charlie Shrem, who’s serving time in prison for his role in laundering money to the Silk Road marketplace, but he also met with legitimate bitcoin business executives who are trying to add validity to the digital currency market by operating in the public eye, and away from tangled mess of the Deep Web that has caused the slew of problems for bitcoin’s better side.
Regardless of whom he spoke with, the sheer passion for the financial tech was evident, which only fueled Popper’s desire to dig more into the topic and the players that make it go round. This also led to his realization of just how much bitcoin was starting to play a role in the financial ecosystem and the investors who were putting their faith (and dollars) into the digital currency.
Shrem, of course, got arrested and then the Japanese bitcoin exchange Mt. Gox went bust — sending a flurry of concern into the bitcoin community, particularly for those who lost out on the $640 million that was said to be lost in the collapse. But what Popper found fascinating about bitcoin at that time is, even with the negative press, bitcoin managed to have a strong following fighting for its worth.
“Despite all this stuff going wrong, there were all these serious people who were talking about the fact that there was something very revolutionary in the technology. That was more important than whatever crisis the technology might be going through,” Popper said. “I think seeing just how many serious people were looking at this technology and seeing something important in it was the other side of seeing [Shrem] get arrested and see that sort of passion, and also seeing how seriously people were taking the technology here — and that obviously includes the banks.”
After Mt. Gox collapsed, Popper said there was some indication that bitcoin itself might just go down with the exchange. But that was also the same time when the big banks started looking into bitcoin and the blockchain, which showed the “contradictory currents that shaped this technology,” he added.
But it also left open a lot of questions.
“Was it going to end in a fiery crash? Was it going to end with another big assent?” said Popper, who explained that these questions helped frame the concept of his book and the history of how bitcoin came to be all it has become today. And while bitcoin has got the backing from some big names, without the early bitcoin enthusiasts who were willing to take a chance on the technology, bitcoin wouldn’t be a sliver of what it has become today.
“You needed sort of outsiders who were willing to try something new in those years from 2010-2011 when nobody cared about this. If they hadn’t been there at that point, the experiment wouldn’t have survived to the point where Wall Street [and] Silicon Valley came in and got interested,” Popper said. “You always need those sort of fringe communities to pick up on a technology like this. There were similar dynamics in play with the beginning of the Internet. You had these sort of fringe groups who were the ones that saw some value in it and were willing to experiment with it. That caused reputation issues, but I think that was a necessary stepping stone.”
Survival Of The Bitcoin Fittest
From his research, Popper was able to discover what has helped make it through tough times — which has really been because of the determination of its biggest fans, but more recently it has been attention from regulators that has actually given bitcoin a taste of credibility.
“The willingness of people to put any trust in it has largely moved in tandem with regulators to step in,” Popper said.
Popper attributes bitcoin’s resilience to the fact that it’s an open source technology, noting that bitcoin’s ability to improve has helped bitcoin slowly gain a stronger reputation in the financial community. Having it be a financial technology that isn’t reliant on any one company has also helped people gravitate toward the digital currency. But there’s one more important aspect that’s helped the bitcoin community develop.
“The social movement has been key to bitcoin. This is like any social network, but also like any kind of money has been dependent on people’s willingness to use it, and people’s willingness to trust people will want to use it later on. So in some sense, to grow, to thrive, it has to become a social movement,” Popper said.
While Mt. Gox and the regular news of bitcoin exchanges shutting down or getting hacked or being ripped off by nefarious operators certainly doesn’t help bitcoin — or its social movement — the willingness of its loyal supporters, along with newfound support from politicians, regulators and Wall Street certainly appears to give some validity to the digital currency – at least in Popper’s opinion. That spark of curiosity — the same spark that encouraged Popper to write a bitcoin book — has fueled the passion of the original bitcoin subscribers. And slowly, it’s sparking interest in financial institutions and leaders.
And that’s what the history of bitcoin is really about; a history that’s told by Popper. A history that tells the story of what could be a major player in the future of financial ecosystem: “Digital Gold.”
To view PYMNTS’ previous Bitcoin Trackers, click here.