The 2015 Fintech Headline “RIP Bitcoin and XBRL, Incumbency Wins”

I promised myself no New Year prognostication posts, but I could not resist this one.

There is too much gloomy Eeyore talk about disruptive innovation.

Headline # 1:

Bitcoin price is down, mining is too expensive, big bad guys will gang up in a 51% attack to steal the last few ornaments from the burning building.

Headline # 2:

The US Senate will overturn the XBRL Mandate, despite pathetic pleas to #SaveXBRL.

Phew, thank goodness that is over! Stop this crazy innovation express, I want to get off at a familiar station.

I think both gloomy tales are wrong. However nor do I think it will be a “snapback rally” where 2015 suddenly makes all the problems in Bitcoin and XBRL go away.

I stick by my Bitcoin price prediction for 2015 that it will be….boring.

The Bitcoin price won’t be much different as we enter 2016. It wont crash to the floor. Nor will it be an amazing speculative win. Bitcoin price will behave more like a…currency. Which is of course good news for anybody building products and services around Bitcoin.

Nor do I think there will be a collapse of the Bitcoin mining industry or a 51% attack.

Bitcoin in 2015 will be a boring “muddle through” story.

The price will be stable. More transactions will happen off chain through services such as Coinbase and Bitpay. Interested parties with a lot at stake (Big VC and the ventures they invest in) will donate resources to help Bitcoin mining economics/safety in the same way that Big IT donate to open source. More complex transactions will happen in Sidechains and Alt Coin based platforms such as Ethereum.

In short:

Bitcoin in 2015 will be….drum roll please….BORING

The XBRL story will be more interesting, except that it won’t be televised and few people will be interested.

XBRL will suffer a near death experience in 2015, but will emerge stronger and start to change the world, but nobody will notice.

The US Senate will shoot the US Capital Markets in the foot by overturning the XBRL Mandate (first for small companies). There is no big money rooting for XBRL and no populist groundswell and politicians do not understand the potential benefits of XBRL to small business.

The headlines after that will be “RIP XBRL, we hardly knew ye”.    

Then XBRL will emerge stronger. The reason I say this with such confidence is that the two alternatives are less plausible:

  • We all give up on the idea that financial reporting to investors and regulators should be machine-readable. That is as implausible as going back to licking stamps to send somebody a message.
  • A better standard than XBRL emerges. That is like expecting Esperanto to triumph over English. XBRL problems are minor to be fixed and plenty of people and firms have the skills and motivation to do this.

Can XBRL survive without the SEC Mandate? Now we are into the realms of speculation, but I think something like this will happen:

  • In some niche market, Small Cap CFOs recognize the discoverability power of XBRL and implement it even though there is no mandate to do so.

Count me an optimist. I think both Bitcoin and XBRL will be good for business and prosperity (albeit very bad for some incumbent businesses) and therefore the RIP headlines will be wrong.

Happy New Year!