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Why Bitcoin Is Kind of Like Webvan or

Webvan Internet Grocer Files for BankruptcyWebvan Internet Grocer Files for Bankruptcy
Webvan delivery trucks sit near a distribution center July10, 2001 in Carol Stream, IL. Photograph by Tim Boyle via Getty Images

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I was asked recently to share my views on bitcoin, the virtual currency whose price—not value—recently crossed $10,000. I’ve tackled tough topics I needed to understand at least a little in my time: semiconductors, enterprise software, net neutrality. (Patience, people. Patience.) But cryptocurrencies, I conceded, is a subject that for the first time in my career has made me feel old. No matter how many times it is explained to me, I only get it a little better than the last time.

What to make of the tulip-like run-up in the price of bitcoin, then? It is clearly a speculative bubble, and not even one with a hint of value to the underlying asset. Indeed, bitcoins were supposed to be a payment mechanism, but their recent price explosion means holders keep holding rather than using as intended, as the estimable cryptocurrency expert Nathaniel Popper points out in The New York Times. (Porn and drug purveyors have found true utility in bitcoins.)

Yet just as Webvan, Ariba, and even had some potential value, so do cryptocurrencies. Gold had a centuries-long run as a vessel for stored value, and so too could these confusing things that are “mined” by computers.

But don’t confuse speculative price increases with valuable products. The latter will take time.


It turns out that Data Sheet readers aren’t only ones reacting passionately to proposed changes to the net neutrality rules. This NPR piece, presented as a “long view,” is in actuality a platform for “free and open Internet” advocate Tim Wu to espouse his views. Contrariwise, the one and only Ben Thompson has weighed in with “Why Ajit Pai Is Right,” where he also takes after Tim Wu.