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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New New Labour: forget ideological purity – Jeremy Corbyn is building a mass appeal party

Rather than a Seventies revival, the Labour leader is creating a social democratic party giving opportunities to all parts of the population.

Does the general election result signal a new political and, dare I say it, public relations phase for Labour?

There is a consensus among commentators and MPs across the political spectrum that Jeremy Corbyn’s leadership has been a continuous struggle to revive the party’s ideological purity and rekindle its cultural and political relationship with the trade unions.

The Economist cover depicting Corbyn as Lenin with the caption “Backwards, Comrades!” encapsulated the mood about a leader thought to only offer old and sometimes toxic solutions to new problems such as the gig economy, Brexit, fintech and corporate taxation.

Criticisms about militant left politics and Seventies nostalgia exist in a political and cultural framework constructed and passionately preserved by New Labour and its proponents. New Labour was the mark of a newly reformed party that had detached itself from the politically and electorally incapacitating idea of common ownership of the means of production (known as Clause IV), and endorsed competitive market economics.

The 1996 manifesto “New Labour, New Life for Britain” set out the party’s “third way” approach to realign the free market with social justice. For New Labour, the state’s minimised role in the economy, the liberalisation of financial services and public-private partnerships can and will lead to an effective taxation system and investment in health, housing and education.

The intellectual architects of New Labour cast this ideological departure as a necessity for denouncing an alleged anachronistic and unrealistic socialist way of thinking, and effectively regaining the trust of the electorate.

Whereas Tony Blair’s New Labour embraced the free market for communicating the party’s modernisation, Corbyn subverts the logic of the free market for the same effect – to present a party fit to govern in the 21st century.

Corbyn’s leadership cannot and should not be perceived as a nostalgic return to a strong state thriving on high taxes and the provision of welfare at the expense of social mobility, entrepreneurship and ultimately electability. Instead, Corbyn’s leadership is an attempt to develop a New New Labour based on the premise of participatory democracy.

As we approach the tenth anniversary of perpetual financial crises, political volatility and consolidation programmes, citizens in the UK and across the world are frustrated with the lack of political imagination and determination.

The conviction of the efficiency of an independent market in every aspect of social life including health, housing and education prevents political leaders and policymakers from implementing radical ideas. Corbyn’s leadership and political programme highlighted the limitations of New Labour in times of crisis and distrust. New Labour has grown old, and the disbelief in socialism appears as a conservative dogma that only contributes to an ever-greater disparity between citizens and parliamentary politics.

The 2017 Labour manifesto, “For the Many Not the Few”, envisions a productive role for the state but such a role is neither restrictive nor a top-down affair. Corbyn’s New New Labour regains its legitimacy as a social democratic party – and the electorate’s trust – by striving to create opportunities on both national and local levels for all members of the population to make meaningful contributions to policymaking, and seeks to broaden the range of people who have access to these opportunities.

From crowdsourced Prime Minister’s Questions, massive mobilisation of activists inside and outside the party’s structures to the understanding of wealth creation as a collective endeavour, the Labour party has the potential to become a creative platform upon which membership, participation, individual ideas and anxieties do matter.

Progressive taxation, redistribution of wealth and nationalisation of key industries are nostalgic musings about lost political battles as long as there exist rigid boundaries between the citizen, politics and the economy. The restructuring of Labour and the redefinition of activism according to the principles of participatory democracy have enhanced the meaning of deliberation and proven that social democracy is capable of dynamic reform and renewal.

What does the future hold for Labour and its multiple ideological orientations? Condemning Tony Blair’s New Labour and praising Corbyn’s new kind of politics after beating expectations in the election is not enough. It should be the duty and aspiration of each Labour leader to formulate a New New Labour for a party that is faithful to its social democratic values and is able to govern by offering new solutions to new problems.

Dr Kostas Maronitis is a cultural and media sociologist, and lecturer at Leeds Trinity University. He is the author of “Postnationalism and the Challenges to European Integration in Greece”.