I ‘own’ 1,017.69 bits, which amounts to 25 cents USD. I was a little giddy when someone on Twitter gifted them to me as a reward for a snarky comment about the financial crisis.
Receiving bitcoin was like getting PONG for Christmas circa 1977. For those not as nerd-minded as I, I assure you this is a compliment.
PONG, in its pixelated glory, was a pioneer of home gaming, a forerunner of the fantastic systems we have today. Bitcoin is part of that same technological spirit because the blockchain has the potential take money, value, and payments out of the hands of states and financial institutions, and bring it into our homes.
Before people start screaming “It’s not widespread and a fad!”, or cheering “Down with the establishment!” let me explain – it’s a start not an end.
Bitcoin is a product of a community that has always been interested in stretching boundaries. It’s where the ideas start, but the ideas really begin to enter our daily lives and become ‘normal’ because of their ability to adapt to current conditions, and then become mainstream. That’s going to take some time, and some new ideas.
To me, the blockchain is part of an evolutionary development in money’s digital transformation. This initiative came from the private sector, but we’ve already seen states create their own digital currency with Special Drawing Rights (SDRs).
The technology and the ideas behind the blockchain are diverse and adaptable – exactly the kinds of “innovative” thinking that the financial industry adores.
Markets and consumers are excited about the possibilities, because it:
- establishes a direct merchant-client relationship. (See Doc Searles – VRM Project)
- provides payments options to citizens whose sovereign currencies suffer from instability
- provides the developing world with alternative currency methods for remittances and investment
- is generating interest from the banking industry about how to useblockchain in their own operations
States and regulators have been cautious. In the EU, the European Banking Authority warned that virtual currencies are unregulated and that lack of regulation brings regulatory risk. However, a few months ago, an official from the EBA told me this did not mean it was against digital currencies – “ We like diversity.”
The US has issued fines and started to regulate Bitcoin with limited success. Meanwhile, like-minded companies strive to provide individuals and firms who use bitcoin and the blockchain with the same confidence fiat currencies enjoy.
Lastly, the blockchain is transparent, but can offer privacy with some effort, which is one of the least understood aspects of the technology. This year, I was at a dinner where a successful business guest dismissed bitcoin saying it was “just for illegal stuff.” When I responded that it was appealing for many reasons including the possibility of privacy, I was asked, “What’s the big deal about your information? Are you some kind of data survivalist?”
No, I was not afraid of the government and did not envision some apocalyptic data future. I just like the idea, which did not make me a contemporary societal anomaly.
The message was not well received, but I was not surprised.
Later, I road home on the train, playing PONG on my smart phone.