Five years ago today (October 1st, 2013), bitcoin’s most notorious marketplace, the Silk Road, was shut down by the FBI and its founder Ross Ulbricht arrested.
Operating as part of the dark web on a Tor hidden service, the Silk Road was an online platform where people bought and sold illicit goods and services using bitcoin. While millions of dollars were transacted over the website in its short span, the Silk Road made headlines around the globe when it was shut down by the FBI after a controversial investigation, and Ulbricht was sentenced to life in prison without parole.
Half a decade on, bitcoin is being used in many different ways. The peer-to-peer currency that was once the payment method of choice for many forms of illegal activity (because of its perceived anonymity) has evolved dramatically, and is now being used at thousands of online retailers and brick and mortar merchants, as well as for cross border remittances, complex futures trading, arbitrage opportunities, and alternative stores of value.
Given the significant changes bitcoin has experienced since its darkest days, we’ve asked for commentary from leading industry experts about its progression, what the future looks like, and the challenges ahead.
Thomas Schouten, Head of Marketing at Lisk, the decentralized blockchain application platform said:
“There have been a number of minor protocol improvements to Bitcoin over the last five years, including enhancements to transaction malleability as well as mempool optimizations. However, the most important improvement was the SegWit implementation which was geared towards addressing Bitcoin’s scalability issues.
As Bitcoin’s protocol matures and becomes more embedded in the mainstream, we are seeing it shed the characteristics that made it a tool for questionable activities during its infancy stage. Now, we are seeing Bitcoin being institutionally accepted as a legitimate payment alternative in governmental municipalities ranging from Switzerland to Japan.
What is even more important is a shift in institutional attitudes towards blockchain technology. It has taken time, but government institutions are now becoming more convinced of blockchain’s long-term viability as a gateway to new levels of cross-sectoral innovation. The blockchain industry, along with the many companies that are driving it forward, will bring positive disruption to global industries and open up new business models for anything from finance, supply chain to voting and data storage. As the blockchain community grows, bitcoin will also be elevated by association. However, Bitcoin is just one piece of a broader ecosystem, where projects range from the obvious, such as payment solutions, to the unexpected, such as addressing voter fraud to sharing solar power.
It is the developments in the overall blockchain field, such as more responsive protocols, efficient consensus algorithms, and tools for grassroots blockchain creators, that will provide the real utility and disruptive power which will be very hard for global institutions to ignore.”
Gabriele Giancola, CEO and Co-founder of qiibee, the Swiss loyalty token protocol helping brands around the world run their loyalty programs on the blockchain, commented:
“Bitcoin has experienced significant peaks and troughs over the last five years, but overall, it has seen heightened mainstream adoption and awareness, demonstrated by the combined crypto market capitalisation soaring to more than US$800 billion earlier this year. As a result, regulatory bodies have also paid more attention, clamping down on activities that abuse bitcoin’s perceived anonymity, and leading to its introduction in traditional retail stores. Once people have an improved perception of the regulatory risks in crypto and understand its utility (in that it is not just an investment vehicle), and once volatility is significantly reduced, it will further pave the way for bitcoin — and other cryptocurrencies — to become a widely accepted asset class in future.”
David Hanson, Co-CEO of blockchain-powered gaming distribution platform Ultra, commented:
“In the last five years, we have seen blockchain tracking analysis improve tremendously, with very effective solutions in place to track the flow of cryptocurrencies on the blockchain. This is why governments and legislators are no longer as wary of cryptocurrencies as cash is far more difficult to control.
Bitcoin adoption has also been steadily gaining momentum and public perception has improved drastically — where it was previously seen as an underground crypto-anarchist project, it is now viewed as a new asset class. This change in perception is very much due to a greater understanding of what the underlying technology is about, leading to the onboarding of many more new users in recent years which has transformed the face of the Bitcoin community.
The most important thing to remember is that the technology is still evolving, thanks to an amazing development team. Last year, bitcoin implemented SegWit, which allows it to scale, supports the development of second layer protocols, including the lightning network, and which allows it to further guarantee fungibility.
20 years ago, people predicted that the internet would never take off or be used on a massive scale, and that it would be used by criminals. Bitcoin and blockchain technology will be no different — the challenge is rather to predict how this technology stands to transform the world we live in.”
Sheffield Clark, CEO of leading Bitcoin ATM network Coinsource said:
“Bitcoin supporters have worked very hard to distance themselves from the criminal element that unfortunately abused the freedoms, privacy, and ease of transfer of the currency for criminal financial gain. Gone are the stories of the Silk Road and Bitcoin being the currency of the criminal; now, there are so many more positive stories and real-world adoption theories on how Bitcoin is currently changing the financial environment in which we live for the better — and is poised to do so even more in the future.
In regards to enterprise adoption, while the bearish economy and the attendant negative press may make many investors skittish about the economy, the recent price stability of Bitcoin offers reassurance to those who use Bitcoin more as a utility than as an investment. As currently constructed, Bitcoin’s best use case is probably that of a speculative investment or as the coin of the realm in order to invest and trade in other virtual currencies. We can see this from our own Bitcoin ATM network, as a large portion of our customers are buying Bitcoin with cash from us in order to use that Bitcoin to trade in alternative virtual currencies offered by online exchanges that only allow those currencies to be purchased with Bitcoin. Still, adoption at a high level by the general population will be a slow and steady process, fostered by both Bitcoin developers and early adopters working to maximize both the visibility and functionality of the coin.”
Jason Truppi, Partner at TLDR Capital said:
“We think that bitcoin has certainly surpassed it’s notorious past and is much closer to mainstream adoption than ever before. There has been significant research that has shown the number of illicit transactions using bitcoin has dramatically reduced since inception
We believe that most institutions are more hesitant to use bitcoin, not because of it’s past, but because of it’s unknown regulatory future and market volatility. Until the SEC and other well recognized regulatory bodies make solid rules and laws regarding the use of crypto in the number of traditional financial processes then Bitcoin will remain on the sideline for institutional investors. Additionally, a number of financial institutions have expressed fears over investing due to market volatility, not necessarily addressing the dark web past of Bitcoin.”