Megan thinks the collapse of Mt. Gox means Bitcoin will fail. I am on the team that says this was bound to happen sometime, thank you Mt. Gox for your service, but it is long past time to turn Bitcoin exchanging over to the professionals. But Megan is having none of it.
The more I think about it, the more I think that the failure of Mt. Gox should make us bullish about the price of Bitcoin. Now, the price of Bitcoin isn’t everything—what matters is the survival of the technology. But price and survival are somewhat linked, at least in the limit, so let’s go ahead and talk about the price.
Start with Tyler’s argument, that a big threat to the price of Bitcoin is simple competition from alternative cryptocurrencies. Now it turns out that getting a cryptocurrency ecosystem to grow up is really, really hard—harder than maybe we thought. It follows directly that Bitcoin faces less competition from other cryptocurrencies than we thought. After all, they too will have growing pains. They too will encounter unexpected behaviors and have to manage the professionalization transition.
If it were a piece of cake to succeed as a cryptocurrency, there would be hundreds of successful cryptocurrencies, and a bitcoin wouldn’t be worth anything. But since it is hard to succeed, if Bitcoin succeeds, then it may be worth quite a lot.