I never had any interest in all the hysterical articles on Bitcoin until I read this non-hysterical one by Marc Andressen who wrote the first web browser, co-founded Netscape and now is investing in Bitcoin-related businesses. Nor have I ever used a post to summarise someone else’s content. However rules are made to be broken 🙂
I have been tangentially interested in Bitcoin only as the first crack in governments’ control over money (and in seeing governments do everything they can to prevent and ‘diss it). So much attention is placed on economic monopolies but we seem to be stuck with political monopolies [“one party/two brand” systems] and currency monopolies controlled by said political monopoly (or arguably by the civil service monopolies which in practice control the politicians more than vice versa). Screaming Lord Sutch, erstwhile leader of the Monster Raving Loony party put it well when he asked why there is only one Monopolies Commission. He should have taken his argument much further 🙂
Here are some snips to whet your appetite from the NYTimes article…
A mysterious new technology emerges, seemingly out of nowhere, but actually the result of two decades of intense research and development by nearly anonymous researchers.
Political idealists project visions of liberation and revolution onto it; establishment elites heap contempt and scorn on it.
On the other hand, technologists – nerds – are transfixed by it. They see within it enormous potential and spend their nights and weekends tinkering with it.
Eventually mainstream products, companies and industries emerge to commercialize it; its effects become profound; and later, many people wonder why its powerful promise wasn’t more obvious from the start.
What technology am I talking about? Personal computers in 1975, the Internet in 1993, and – I believe – Bitcoin in 2014.
One can hardly accuse Bitcoin of being an uncovered topic, yet the gulf between what the press and many regular people believe Bitcoin is, and what a growing critical mass of technologists believe Bitcoin is, remains enormous. In this post, I will explain why Bitcoin has so many Silicon Valley programmers and entrepreneurs all lathered up, and what I think Bitcoin’s future potential is.
The criticism that merchants will not accept Bitcoin because of its volatility is also incorrect. Bitcoin can be used entirely as a payment system; merchants do not need to hold any Bitcoin currency or be exposed to Bitcoin volatility at any time. Any consumer or merchant can trade in and out of Bitcoin and other currencies any time they want.
Why would any merchant – online or in the real world – want to accept Bitcoin as payment, given the currently small number of consumers who want to pay with it? My partner Chris Dixon recently gave this example:
“Let’s say you sell electronics online. Profit margins in those businesses are usually under 5 percent, which means conventional 2.5 percent payment fees consume half the margin. That’s money that could be reinvested in the business, passed back to consumers or taxed by the government. Of all of those choices, handing 2.5 percent to banks to move bits around the Internet is the worst possible choice. Another challenge merchants have with payments is accepting international payments. If you are wondering why your favorite product or service isn’t available in your country, the answer is often payments.”
In addition, merchants are highly attracted to Bitcoin because it eliminates the risk of credit card fraud. This is the form of fraud that motivates so many criminals to put so much work into stealing personal customer information and credit card numbers.
Finally, I’d like to address the claim made by some critics that Bitcoin is a haven for bad behavior, for criminals and terrorists to transfer money anonymously with impunity. This is a myth, fostered mostly by sensationalistic press coverage and an incomplete understanding of the technology. Much like email, which is quite traceable, Bitcoin is pseudonymous, not anonymous. Further, every transaction in the Bitcoin network is tracked and logged forever in the Bitcoin blockchain, or permanent record, available for all to see. As a result, Bitcoin is considerably easier for law enforcement to trace than cash, gold or diamonds.
Check out the article! The world is changing fast 🙂