The Future of Bitcoin Is Not as a Digital Currency

gettyimages-488245866CIRCLE UNVEILED ITSELF at a bitcoin conference in 2014, vowing to take the digital currency mainstream. But like so many other startups that embraced this big idea at around the same time, its mission has changed.

In January, I met Circle CEO Jeremy Allaire for coffee in San Francisco. Even then, he was careful to paint his company not as a bitcoin operation but as an outfit that would help people easily trade good old-fashioned dollars with friends and family via a new smartphone app. And now, as it announced yesterday, Circle will no longer allow customers to buy and sell bitcoin.

Allaire says that Circle, a marquee startup backed by Goldman Sachs, never really saw bitcoin as a consumer technology. “When we founded this company three years ago, the vision was never to build a bitcoin company,” he says, comparing bitcoin to internet protocols like http or smtp. In other words, the company saw bitcoin as a behind-the-scenes technology, not as a mainstream digital currency that the average person would use to pay for goods online or in a physicalSTORE.

Well, all these years later, bitcoin is certainly not a mainstream digital currency. And Circle’s decision to stop operating as a bitcoin exchange is just the latest sign that it won’t become one anytime soon.

Despite big promises from early adopters, bitcoin is still plagued by tax and regulatory issues. And the bitcoin community is still fighting over its core technology—a fracas that could significantly hamper bitcoin’s ability to expand in the near future.

Bitcoin has not become a mainstream currency—and it won’t anytime soon.

As it backs out of services that let people buy and sell bitcoin, Circle is pointing these customers to another exchange, San Francisco-based Coinbase. But Coinbase is also moving away from services for consumers. It’s now focusing on running a new exchange where large institutions, not individuals, can move bitcoin. And as far back as February, Coinbase said it didn’t really want to operate as a bitcoin wallet, meaning it didn’t really want to provide a way for individuals to hold the digital currency and actually buy stuff with it.

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