Almost a year after Ivy League professor Vivek Wadhwa pronounced the death of Bitcoin, the digital currency has never looked stronger. It reached its all-time high market cap and outperformed every other currency and assets in 2016. In consideration of Bitcoin’s recent price rally, it seems like an appreciable time to breakdown Wadhwa’s declaration of Bitcoin’s death.
Illogical arguments and misconceptions
Bitcoin was declared dead several times this past year, most notably by Nobel Prize winning economists and prestigious university professors. Wadhwa’s article entitled “R.I.P., Bitcoin. It’s time to move on” was particularly interesting, considering his position at Harvard, Berkeley, University of California and Stanford as the professor of engineering, law and research.
According to Wadhwa, Bitcoin was “born with serious flaws.” However, these aren’t technical flaws, in fact, they are regulatory issues.
Anonymous currency: cash
Wadhwa noted that Bitcoin couldn’t attract the likes of mainstream users and overtake the conventional financial industry because it was unregulated and provided anonymity. Ironically, another form of storing value that is unregulated and anonymous exists, and that is cash.
The only difference between cash and Bitcoin is that the former is restricted and controlled by a central entity and the latter is decentralized and its value is purely based on the market.
In 2016, Bitcoin protected the wealth and money of mln of people across the world, specifically in regions such as China, India, and Venezuela wherein governments and local authorities have imposed impractical monetary and financial regulations to prevent the devaluation of their currency, restrict money flow and reduce capital outflow.
India and Venezuela have had one of its worst years in recent history, as the general population struggled to gain enough cash to support and finance daily living.
The decentralized nature of Bitcoin enabled individuals and businesses in India and Venezuela to obtain a valuable store of value to acquire basic necessities such as food and medicine from online platforms.
Blockchain instead of Bitcoin
Yet, failing to learn from the tragic economic and financial chaos resulted from government monetary, Wadhwa stated that a centralized or permissioned Blockchain must replace Bitcoin in order to ensure that the financial system is controlled by an entity. He also noted that a currency must not be anonymous, must have a central authority in control and must be able to settle transactions in “milliseconds.”
The idea behind the judgment of Wadhwa on Bitcoin is the very reason mln of people in remote places and leading economies are struggling to finance their daily living. The control and monopoly of governments over money and assets are the cause of the starvation and discomfort of million of people across the globe.
Thus, to suggest a centralized payment system once again to replace another centralized payment system is illogical and irrational. More importantly, the reasoning behind Wadhwa’s statement in declaring the death of Bitcoin due to its decentralized nature is also severely flawed, as that feature of Bitcoin led to its success today.