Today’s ICYMI, because it’s one of my favorite topics: Bitcoin, the ultimate cynical expression of contempt for the concept of money, has apparently worn out its welcome in Australia, which at one time was considered a trailblazing market for the cryptocurrency.
In what is perhaps a sign of just how irrelevant Bitcoin has become, news that Australian banks had closed the accounts of 13 of 17 Bitcoin exchanges in the country and frozen the accounts of the remaining four late last month barely made a blip on the news radar.
Reuters finally got around to posting a bottom-of-the-page story about it over the weekend, about a week late, and most of the other big media outlets didn’t even bother.
The move, which the Australian Banking Association wouldn’t confirm was coordinated or not, renders Bitcoin virtually useless as a currency in Australia. Banks won’t touch it—Bank of Queensland, which reportedly still holds some bitcoin accounts, when asked about it would only say, “Virtual currencies fall outside of our risk appetite”—and the bad rap the digital currency has gotten from several high-profile cases that have exposed its vulnerability to fraud and the ease with which it can be used for money laundering and illegal trade, has driven away most of the early adopters among businesses.
Not that it would seem to matter much to consumers. The owner of a hotel in Sydney related how he began accepting Bitcoin when a local group of Bitcoin enthusiasts chose his establishment as a venue for their monthly meetings; since then, he told Reuters, he does about $100 of business in bitcoins per month—from drinks purchased by the Bitcoin fan club, and no other transactions. Other businesses dropping the virtual currency have done no business with it in a year or two.
Supporters of the idea of Bitcoin in particular and digital currencies in general will undoubtedly respond to this the way they always do, with assertions that the concept is still evolving and represents the future—albeit one that may be farther away than they hoped—of money, because it’s obviously a better alternative to fiat money controlled by central banks.
No, it’s not, and not even the Bitcoin ecosystem seems to believe that it is, because very early on it became apparent that in order to become commercially viable, a lot of the anarchist distaste for things like “centralization” and “being organized” would have to be overcome. As a result, control of the virtual currency quickly devolved to those with real-world resources; global bitcoin prices were determined by a handful of large trading markets, and the processing of transactions—called “mining”—was controlled by a relatively small number of syndicates capable of gathering the raw computer power to carry it out. While the creation of Bitcoin’s quasi-centralized structure may have been more organic and democratic than the traditional money system, its results were not perceptibly different, and were actually less worthwhile most of the time.
If the Bitcoin experiment has taught us anything, it is that people’s sense of wealth is dependent on tangibility. While it is certainly true that most of us don’t see most of our money in a literal sense, the fact that it has a specific value and institutional source makes it reliably real, despite its many flaws. For the consuming public, using an avatar for real money—because thinking in terms of “real money” is ingrained in our modern psyche—when real money would work just as well is an unnecessary step.
The die-hard advocates of digital currency will undoubtedly find ways to keep their hopes alive, and hopefully, they will maintain the enthusiasm necessary to keep working on the idea. It may yet amount to something useful in the years to come. But only if those who refuse to abandon the notion remember that failure is often our greatest teacher.