What's bitcoin's future?

A lot of booms and busts until it dies for good.

In the course of a little under seven hours, the price of Bitcoin in US dollars fell by over sixty per cent on Wednesday, to $106 a coin. Since then, it's fallen further, and is currently trading at $85 $80 $78 $80 a coin on a downward trend.

If the price doesn't recover, it seems like the beginning of the end for the speculator's bubble. The nature of such a bubble is that it can't hold steady for particularly long, since speculators must sell to realise their gains. Selling depresses the price, which sparks more selling, and so on.

But as bitcoins trend back to a low price, conversation is turning to their future. If the era of the bitcoin millionaires is over, does that mean that the era of bitcion being actually useful is upon us?

That's what I suggest in my piece in this week's magazine (a 180-page centenary spectacular, available in all good newsagents (the magazine, not the piece)), but there's more difficulties standing between there and here. The big one is that, even if bitcoin plunges further and the speculators market is destroyed, the deflationary problem will never go away.

The very nature of bitcoin is designed to encourage hoarding. That's what deflation means: if you hold currency, that currency will be more valuable next year than this year. For the last month, its not just been in deflation but hyperdeflation, a symptom of its meteoric rise.

But suppose bitcoin falls back to $10 a coin, and the absence of speculators returns a degree of stability to the market. A few online traders might decide that it makes sense to offer the currency as an alternative to Paypal, and find that, freed from the hyped-up claims that it is the future of all currency, it actually works quite well for cheap and easy transfers of money online.

But.

The minute bitcoin starts to be useful, the deflation problem rears its head again. If a sizeable number of online retailers are taking bitcoin, then it makes sense to buy a lot now and hoard them until you need them, because both the deflationary underpinnings and the expectation of an increase in the USD/BTC exchange rate mean that they'll be worth more in the future.

But once you start hoarding them, the supply goes down, and other people who need them for transactions have to pay more for them. That increases the exchange rate; and so there's more incentive to hoard; and so the exchange rate rises further – and suddenly it's back in another bubble, which eventually pops, and people again lose money.

This volatility, in other words, is inherent to the platform. That's a major barrier to widespread uptake, and a reason why I'm bearish on the future of bitcoin full stop. Once it's dead, I fear it's dead for good.

BOOM and bust.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Leicester City's ascent shows how being a good loser can make you a great winner.

Claudio Ranieri wasn't expected to take a team to the top of Premier League. But dignity can earn you second chances.

Dignity isn’t so dated after all. Claudio Ranieri, champion; José Mourinho, unemployed. Dignity, it turns out, earns you second chances. It’s the Machiavels who run out of time.

The story of Leicester City’s Premier League triumph – one of sport’s finest – ended at Stamford Bridge on 2 May when Tottenham, Leicester’s nearest challengers, only managed a draw against Chelsea. In some respects, it also began there. Superficially, Ranieri “failed” during his stint as Chelsea’s manager from 2000 to 2004. Yet he never lost his dignity in one of football’s craziest jobs. He was courteous and amused to the end: the same qualities that helped to make him a winner at Leicester.

People remembered, both inside football and beyond. Ranieri’s sense of perspective and lightness of touch, evident during those hard times at Chelsea, brought him well-wishers in his better days at Leicester. His dignity as a loser has been recast as a benevolent and advanced form of strategy. Let’s hope that it is widely copied.

There is a danger of reading too much into Leicester’s splendid success. A small industry is already specialising in undercutting and puncturing overblown editorialising on “the meaning of Leicester”. Fine. Let scepticism have its moment, too.

But can we agree on a compromise? The romantics must concede that Leicester have a darker side, too. It wasn’t all charm and self-sacrificial teamwork. There was also a good measure of sports science, data analytics and street smarts. The Premier League has not become a laboratory of sporting social justice overnight. Leicester, it is true, also benefit from foreign capital. And the big guns – with their even bigger bank balances – will surely be back, sooner rather than later. History may yet record Leicester’s time at the top as a surprising interregnum in a war between giant dynasties.

Yes, I concede all of that. But will the cynics at least acknowledge some happier truths? First, a central defect of the Prem­iership has been its lack of competitive equipoise. It’s a great show but it always flirted with dangerous predictability.

Even its magical moments, such as Manchester City’s last-minute triumph in 2012, were unlikely only in the manner in which the story unfolded. Goliath beat David – on the day and over the course of the whole season – but it just took him a long time to finish the job. Yet we hailed the story, even though the favourites won, as evidence of redemptive uncertainty. Now, by contrast, we have the real thing with Leicester City’s win: genuine surprise, sport’s most precious currency.

Second, it’s time to wave goodbye to the lazy assumption, increasingly common in modern sport, that there is something intrinsically advanced about nastiness in players or managers. This meme continually creeps into the way we think about success. A manager’s rant is explained away as: “He really hates losing.” A scarcely veiled personal attack on a rival is justified as: “Real winners are all a bit like that.” Sneering contempt is whitewashed away, accepted as a burning hunger to win.

It all adds up, logically and unavoidably, not only to a lame justification of unpleasantness but also an implicit attack on behaving decently. If we say that John McEnroe’s racket-smashing is what makes him a winner, we are subtly belittling his opponent for keeping his cool.

In sport’s professional era, “good loser” has turned from one of the highest compliments into a patronising put-down. Being a good loser used to refer to behaviour when the ball was no longer in play, a virtue unconnected with winning or losing out on the pitch. Garry Sobers, Bobby Jones and Stefan Edberg were good losers. They were pretty good winners, too.

Somehow the notion of being a good loser turned 180 degrees, especially in English sport, which suffers from self-hating guilt about amateur values. It came to describe someone who is literally adept at losing – comfortable with defeat, adjusted to living that way. This accusation was levelled at Ranieri at the end of his term at Chelsea, as he suffered the humiliation of a public search for a replacement. José Mourinho, the chosen one, turned the knife when he was asked why Chelsea were sacking Ranieri. “I was told they wanted to win,” he scoffed. Mourinho voiced a widely held view: in place of a good loser would come a serial winner.

And now? The good loser is still with us, now a great winner, smiling and deflecting the credit. Ranieri almost missed the match that secured Leicester City’s victory on Monday night, because he had flown to Rome to have lunch with his 96-year-old mother. A little too stage-managed? If this is PR, let’s have more of it.

What of the bad loser who knew only victory? Mourinho is casting around hopefully, looking for another chance to mould a dressing room in his image. Yet it’s a risk, isn’t it, to give power to bad losers? And his prospective patrons are feeling risk-averse. The catastrophes of Real Madrid and his second stint at Chelsea, in which Mourinho lost the team, are hard to forget. Bad losers, contrary to the myth, are risky propositions because the earth is scorched when things don’t go according to plan.

Ranieri left Chelsea in good shape, having signed or identified most of the players who would go on to become the core of the team’s glory years. Mourinho, by contrast, left Chelsea in despair, the players seemingly mutinous and losing matches almost by design. Talent is powerful and Mourinho may be back. But it’s time to de-correlate winning and unpleasantness.

Machiavelli had the best aphorisms but he wasn’t always right. Leicester are champions and a good loser wears the crown. How much more can sport do?

Ed Smith is a journalist and author, most recently of Luck. He is a former professional cricketer and played for both Middlesex and England.

This article first appeared in the 05 May 2016 issue of the New Statesman, The longest hatred