We need to consider the distinct possibility that Bitcoin is dying. A star gone supernova. Something will be there for a while, but it will never be what it could have been.

Banks and regulators have already succeeded: enough doubt, enough regulatory fear, has been injected early on. No young tech entrepreneur in the Valley wants to create an innovative platform, only to find the book thrown at them - a dusty, filthy AML/KYC book that only applies to upstarts and not massively connected banks actually laundering money for organized criminals. No one with a head on their shoulders wants to do jail time in post-9/11 police state America or Orwellian firewalled China for creating a fucking Bitcoin app.

The big players didn't get in, and now they won't. Nobody wants to bet on a loser, which Bitcoin has been over the past few months, unequivocally.

PayPal announced plans for Bitcoin, and the price went down. PayPal has 150,000,000 users, to put into perspective how massive that news should have been. Then, just the other day, Bill Gates on Bloomberg TV told the interviewer "Bitcoin is better than currency" -- and the price went down further.

One of the richest people on planet Earth, and arguably the single most influential living tech visionary aside from maybe Larry Page, gave Bitcoin the most sterling endorsement possible -- and the fucking price went down!

Had Bill Gates said the same thing about any publicly traded tech stock -- eBay, for instance -- the short-term valuation would have skyrocketed.

Imagine this: "eBay is better than e-commerce." -Bill Gates

eBay would experience a flood of positive press, the stock would surge, and of course new users and returning users to eBay would skyrocket (people would be curious to see what Gates is all excited about).

Bitcoiners are increasingly appearing to not be the A-team. You folks are MySpace, you took the idea of a "social network" as far as you could, really admirable run, and now it's time for the ruthless algorithmic geniuses (i.e. a Mark Zuckerberg or two) to come along and drink your fucking milkshake. Because you don't deserve it. You've been duped by regulators. You've been duped by Karpeles. You've been duped by yourselves and your own online entitlement, completely detached from the currency's actual standing in the world outside of /r/bitcoin.

Draft 1 of the BitLicense proposal from NY State was absolute insanity. If you're a book editor, and you contract the writing of a non-fiction book to a career author, imagine that author hands you a completed draft that is completely intellectual dishonest dogshit from cover to cover. 200 pages of things you just can't publish because they make no sense, there's no element of perspective demonstrated throughout the work.

Assuming you're on deadline and you want to keep your job as an editor, do you go "Ah, well I'm sure Draft 2 will be substantively better! To the moon!" as many Bitcoiners have done with the draconian BitLicense... or do you go "Get the fuck out! Your contract's pulled, I'll find someone else."

You go with option 2. (I've worked around publishing before.)

You don't reward massive dishonesty and a massive reputational hit to Bitcoin with "We know you'll get this right the second time around."

NY State has made the decision -- an economically flawed decision -- that constructing a regulatory moat around NYC's big banks (who are perceived as needed "job creators") is the preferable way to deal with the mathematically certain coming wave of digital currency acceptance.

This is flawed thinking because the innovation is still going to happen, it's just now going to happen in Austin, San Francisco, London and in any European country that doesn't have its head completely up its ass.

Bitcoin tried to play nice with dishonest regulators, the jaws of the same exact government that considers Edward Snowden and Julian Assange - non-violent information propagators - to be top enemies of the state.

Instead, it should have completely mocked and seeked to revise a structure where tech entrepreneurs are mortified of playing with Bitcoin because of AML/KYC laws clearly written to go after Pablo Escobar types decades ago, and certainly not created with any intention of making it impossible for the garage entrepreneurial spirit of America to take hold as it did with personal computers, the Web, digital photography, and other recent technology revolutions the US economy has disproportionately benefited from.

Digital currency definitely takes off. The need for frictionless, instantly transportable value is clearly there - and decentralized coins will always be the ones at the top of the list, in my opinion, because disparate economic actors wouldn't be willing to all participate in it otherwise (i.e. no US entrepreneur would want a coin run at the sole discretion of an unaccountable Chinese bank, for example - and vice versa).

I just see no reason why Bitcoin has to be the one. They lost the regulatory battle, they're losing the PR battle (I spent a lot of time this year trying to raise awareness for Bitcoin in the media, and I get an inordinate amount of shit from Bitcoiners - they're a brilliant group overall, but there's a mean, petty minority that is really quite vocal).

Also, Bitcoin's algo benefits miners more than users, I'd argue. Proof-of-stake is only discredited by Bitcoiners because they know what a threat it is. (My money in Hyper has fared much better over the past couple months, and has actually made me money - proof the market is starting to wake up to the utility of next gen proof-of-stake currency.)

Bitcoin's mining distribution has led to a more centralized mining environment, whereas a good proof-of-stake by design leads to less and less centralization over time since anyone can "mine" it from their laptop or desktop wallet client. Only the wealthy and extremely tech savvy can mine Bitcoin profitably at this point.

As with social networks, I think the better algorithms win from here on out. People are already sold on the benefits of digital currency. Bitcoin's algo worked at creating psychological rarity and driving some usage, an incredible achievement, but it's not working too well at disincentivizing short-term thinking (i.e. miners dumping large quantities).

Clearly it's not working well in that regard, or the price wouldn't continue its ugly slide. Bitcoin is just a commodity, no one is treating it with the reverence certain proof-of-stake coins will be handled (because of the future expected value).

And look, if Richard Branson and Bill Gates both come out swinging for you in televised interviews and you can't see a recovery the problem isn't the world, or its lack of "acceptance".

Bitcoin was handed the world several times this year, and shat its pants each time. Even the Mt. Gox travesty could have been neutralized with one competent PR person to put it into perspective for the media: a tragic, but tiny loss of wealth compared to anything the banks have been complicit with.

D

disclaimer: these are opinions and like many human beings I lack the ability to forecast the future with any degree of legal certainty - thus no guarantees or warranties are provided.