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Victory Lap? 2017 Was Bitcoin's Backwards Year

2017 was another gloriously miserable year for bitcoin. As in 2016, gains in the price of bitcoin belie deep deficits in the cryptocurrency world. Bitcoin's stock of social capital, the human institutions around this most important technology, remains woefully deficient, and the capacity of bitcoin to deliver anything other than wealth to "HODLers" has fallen precipitously. Don't get me wrong: wealth is great! But some of bitcoin's greatest potential benefits — global financial inclusion, broad gains for financial privacy, a stable money supply for those without, and increased liberty — appear further away now than they did a year ago, or at any time in bitcoin's history. Big gains, bigger pond Yes, bitcoin went up in price against fiat currencies this year. By a lot. Increasingly recognized as an asset class uncorrelated to most others, bitcoin and crypto should be part of any smart investor's portfolio. That bodes well both for bitcoin and for investors. But, bitcoin’s "market cap" is worth keeping in perspective. Among the arguments for conservatism in bitcoin scaling this year was that there was $30 billion in value (then $60 billion, then $100 billion) at stake. Those are big numbers, until you consider that the "market cap" of the four largest currencies in circulation is about $22.5 trillion. Bitcoin's "size" is less than 1 percent of the mega-currencies, perhaps half that if you count all the rest. If it were possible to measure effects on humanity, bitcoin would probably rank even smaller than low tenths of a percent. The pocket calculator has had a bigger influence on human progress than bitcoin. Velcro has improved human welfare more than cryptocurrency has. Given its potential, that's a damning indictment of bitcoin's influence so far.