Bitcoin won’t bring major change

A year or so ago, there was a lot of news about Bitcoin and how it was going to take over the world, then nothing. This week, I read a story about how hackers stole 19,000 Bitcoin worth about $5 million out of virtual wallets. Heck, Bitcoin even sponsored a football game this year. What is the real status?

Bitcoin are nothing more than a store of value and medium of exchange for people willing to use them. However, you can use just about anything as money, as long as someone else assigns a value to it, and is willing to accept it. If I have ostrich eggs and you want them, voila, let’s make a deal.

The reason Bitcoin vanished from the news the way it did is easy enough to explain: The story got old, and it was no longer interesting. With the exception of a few true believers, no one really thought or thinks Bitcoin is going to do away with the world’s existing currencies, especially the U.S. dollar. Sure, there might be exchanges and some businesses willing to accept them, but the folks who make the laws and have the nuclear warheads make, use and accept U.S. dollars.

Further, these same people say the currency they make is “… legal tender for all debts, public and private.” So, as long as they say the U.S. dollar is the good stuff, it will be, whether you think it logical or not. Case closed.

A few years ago, I made a presentation to a group here in Birmingham. During the Q&A, someone asked me why “alternative energy” hasn’t been the home-run investment everyone thinks it should be. I told him the reason was two words: natural gas. We already have a ton of it, more than we can reasonably burn off anytime soon, and it is cheap. This was before the height of the fracking boom.

I tell you this because we can create and tap all different kinds of energy sources, but they will still have to compete with good old fossil fuels. For instance, what if I could harness moonbeams and put them in the tank of your car? That would be pretty neat and environmentally friendly, right? However, what if they didn’t burn as hot as gasoline or even liquefied natural gas, and cost five times as much? Would they still be as neat? Of course not.

The same can be said of Bitcoin, Peercoin, Ripple, Dogecoin, Namecoin, and the rest of them. There doesn’t seem to be a big barrier to entry.

Hey, all these cryptocurrencies are really cool, but good old-fashioned ones have such commanding wide-spread usage, the best the new guys can do is nibble on the margins. Right now, these margins are miniscule, but if they ever start to eat into the U.S. dollar, guess what, the Feds will have something to say about it, namely let’s regulate the market and throw some controls on it.

Then, really, why use cryptocurrencies at all? I have yet to hear a good answer to that question.

So, what is the real status of Bitcoin? You know, I would have to say it is going about as well as you can expect. The novelty has worn off, and some inevitable security breaches have happened. On the flipside, it is still around and more businesses are accepting it.

But, it still isn’t a threat to the U.S. dollar, and never will be.

John Norris is a managing director and the head of wealth Management at Oakworth Capital Bank in Birmingham. He can be reached at john.norris@

oakworthcapital.com.