Simon Johnson is a Ronald A. Kurtz Professor of Entrepreneurship, MIT Sloan School of Management.
The following article originally appeared in Consensus Magazine, distributed exclusively to attendees of CoinDesk’s Consensus 2019 event.
The promise and potential of bitcoin as a technology is frequently described in terms of a platform. On top of bitcoin’s permissionless blockchain, the argument goes, all kinds of things could be built to reduce the power and profit of trusted intermediaries. If you fear and resent monopolies, particularly those that are becoming more obnoxious as the digital age progresses, this is an alluring future.
It may also be an illusion. Not only are the use cases so far rather limited, but increasingly implementations – upon closer inspection – turn out to be “permissioned” blockchains, which are actually some form of relatively centralized shared database controlled by trusted intermediaries.
The terminology and rhetoric may have changed, for activities such as organizing supply chains or clearing financial transactions, but the reality looks remarkably similar to what existed before bitcoin was invented. Bitcoin’s arrival, and the disruptive potential it vaguely represented seemed to goad various industries into exploring an old form of distributed database technology. But this is hardly a revolution.
Will bitcoin ever have a more meaningful impact on society than this?
Before we ponder that more deeply, let’s pause and reflect on what definitely already exists. Bitcoin has proved to be a remarkably robust means of making certain kinds of payments. It is also a store of value, albeit one that is highly volatile. Of course, bitcoin has also spawned a variety of other cryptocurrencies, which range from being reasonable propositions to completely unappealing.