Solidifying the Idea of Bitcoin

A few months ago, a journalist of the good sort interviewed me about Bitcoin. It is possible, when you are dealing with reasonable people, to explain Bitcoin to them and have them understand it in the proper context. The starting point here was a provocative article of the type we are familiar with, claiming that “Bitcoin is dead”. In 2017 no less. You have two choices in Bitcoin if you want to talk about it; learn patience and be prepared to hear the same objections over and over, or stop talking about it. The thankless task of education will not end for at least a decade.

For starters, what are your initial thoughts on the “Death of Bitcoin” article?

I think the article is misinformed, and is typical of the sort of thing written a few years ago. There will always be computer illiterates and Bitcoin illiterates, but their numbers are dwindling as Bitcoin’s user base expands. I guarantee you that if that outlet took Bitcoin for subscriptions or donations they would never open their mouths to attack it in any way.

What’s your response, then, to the warning that Bitcoin is too politically risky? That politicos will eventually do everything they can to blast it out of existence? That it’s only a matter of time?

This is FUD (Fear Uncertainty and Doubt) or “Scaremongering”. Japan has just formally legalized Bitcoin, and Hong Kong has explicitly said they will not regulate, with their “hands off” approach. Other countries will follow, and they will absorb all the Bitcoin businesses, who will serve everyone globally.

Bitcoin is not politically risky; it is math, and nothing more than math. It is no different than Linden Dollars or Monopoly Money. Troll writers like to characterize Bitcoin as money and dangerous, missing the irony that they are publishing on the internet, using the same basic software tools to spread their drivel that are used in Bitcoin. All the software techniques in Bitcoin are very old; what is new is the novel arrangement of these tools. If Bitcoin is risky, then so is SSL, the tool that secures your chats and Amazon purchases. You can’t have it both ways; you can’t be against Bitcoin and for Amazon. You can’t be against Bitcoin sold simply through vouchers (as http://azte.co) does and be against Amazon Gift Cards, that work exactly the same way.

Bitcoin is a sea change in the way people think about money and how they account for it. Before Bitcoin, the word “fiat” was used only by the readers of http://lewrockwell.com now, everyone, even people who do not like Bitcoin call the dollar “fiat”. A powerful transformation is taking place, and it will not be stopped. The USA is not the entire world, and Bitcoin is global. If everywhere other than the USA adopts Bitcoin, then it will be one of the greatest software successes of all time. There is nothing to stop the rest of the world adopting Bitcoin; the GSM standard was everywhere except the USA and eventually they had to capitulate and adopt it.

Bitcoin will succeed. There is nothing any government can do to stop it, just like they can’t stop file sharing over BitTorrent and IRC. It isn’t a question of time either. No amount of time can put the Bitcoin genie back in the bottle. This change is forever. The only way out for anyone whose business is challenged by Bitcoin is for them to totally embrace and integrate it. The Japanese have understood this.

The courts in the USA (one in Brooklyn and the other in Miami) are also forcing people to wake up out of their collective hysteria. Two separate courts in different jurisdictions have now ruled that Bitcoin is not money. This means the “politicos” have no law to resort to to stop it. Texas has tabled a law to protect Bitcoin as a right. Slowly but surely, everyone is moving to the correct side of Bitcoin.

Could you explain in a little more detail how and why you believe bitcoin won’t be stopped? Many Americans still believe the government can and will simply pass a federal law and… poof… make bitcoin go away. As a colleague wrote recently, “Bitcoin itself, it’s doomed. The end is near. Soon as Congress has a reason, they figure out how to shut it down. You mark my words. Too many banks have too much to lose. And if we know one thing, it’s that big banks and Congress are part of the same beast. The move is, like I’ve said before, folks have to get their heads out of the clouds. Digital currency — the anonymity, quote unquote security… that’s all great… in theory. In reality, in the real world, all those great parts have just as many if not more potential pitfalls. “The sooner people realize that, the better. You bet on bitcoin, you’re playing with fire. I can’t be clear enough about that. There’s too much REAL good news around us that’s compelling and actionable for me to spend one more second thinking about bitcoin.” Your response?

“Ugly Americanism” is anti Americanism. Remember GSM. Look at how prohibition is collapsing all over the US. America is the greatest country on earth but it’s not perfect, and some of its citizens are insular, ignorant and parochial. In the age of the internet, it’s impossible to stop good ideas from spreading, and the world of 2017 is not like 1957, 67 or 77. Many parts of what used to be called The third World now rival the USA in infrastructure. America doesn't have the option of Luddism and ignorance; someone will eat it’s lunch.

Bitcoin cannot be stopped. This is not a belief, but a fact, based on the evidence of how it works and previous peer to peer software that has lasted for decades. You only need to look at two examples to come to this conclusion. First, over Internet Relay Chat, software was traded for many years uninterrupted and undetected. Then, after several iterations of how to arrange a Peer to Peer network (Napster, Gnutella, BitTorrent) BitTorrent emerged as a way to share files that cannot be stopped. One third of all internet traffic is taken up with BitTorrent, and billions of files have been swapped without any consequence. There is no way to stop BitTorrent, and in some cases, its use is impossible to detect.

Bitcoin is the same in its effect, and is more safe in many ways. Rather than having to expose your IP address for a significant amount of time, a Bitcoin transaction takes a fraction of a second, and is indistinguishable from other internet traffic. It can be accessed in a number of different ways, through different clients, and these transactions cannot be stopped in advance of being made without shutting the entire internet off. Bitcoin, like file sharing, will not be stopped, and unlike file sharing, there is no company that can change its distribution model to adapt to the new reality. Bitcoin is good money, and all the State can produce is bad money. The only meaningful way Bitcoin can be stopped is if the State creates its own Bitcoin network with identical features. We know that this is unlikely to happen, because the State is obsessed with controlling people and not helping them. Several governments are working on Bitcoin competitors and all of them will fail, because they are sub optimal, anti market offerings that Bitcoin beats every time, because it is a pure free market tool.

Passing a law did not stop file sharing, and threatening massive fines and gaol time did not stop it. No law can stop people from engaging in the market; drug prohibition has been a dismal failure and is being repealed across the USA. Any attempt to ban Bitcoin will similarly fail, only this time, it will be much worse, because everyone needs money, in numbers that greatly exceed the number of people who want to smoke Marijuana. Money is one half of all transactions. Americans, once they wake up to Bitcoin, will flock to it. It will become “The money of the internet”. The American government can no more make Bitcoin go away than it can make Marijuana smoking go away.

“Soon as Congress has a reason, they figure out how to shut it down.” This is ridiculous. Congress finding a reason to “shut down Bitcoin” will not result in them finding a way to do it. Also, Congress has no power over anyone in any other country other than America. Internet Poker is illegal in the USA, but it is thriving globally. By your colleague’s logic, Congress should be able to “shut down internet poker”. It’s not very intelligent. And of course, people in America play internet poker illegally every day. With Bitcoin, they will be able to play internet poker and be paid in Bitcoin. Who is the loser in this? The American government, who does not collect taxes and fees from internet poker sites, draining what is probably a lot of money from the USA to the EU and other jurisdictions.

Your colleague says banks have too much to lose. So did the telephone companies with Skype. So do the Taxi companies with Uber. Just because some established group has something to lose, it doesn’t necessarily follow that they will be able to stop an innovation. This is not very serious thinking, clearly. Bitcoin is a very difficult topic to understand. People who are computer illiterate, do not have passports, know nothing about the history of software, have a very hard time understanding how it is possible, and how the changes that are coming are going to be unstoppable. It doesn’t matter what you can or cannot understand; Bitcoin’s nature is not subject to the ignorance of the lowest common denominator ugly American. No one cares about whether an ignorant, uneducated man does not want to spend time thinking about Bitcoin. Bitcoin was written without reference to these sorts of people, and it persists without reference to them also. In the same way that some people refuse to use eBooks or even email, there will be people who refuse to use Bitcoin, just as when the telephone was commercialized, there were people who refused to have them in their houses. There will always be unintelligent, uneducated people; they are a part of the way things are. The world changes because intelligent people don’t care about them, and carry on inventing and helping the public.

What are some, if any, of your predictions about bitcoin and cryptocurrency in general? Also, what are the implications of mainstream adoption?

Bitcoin will become as big as email. It will be on every cellphone, phablet, tablet, laptop and desktop on Earth. It will be used for every conceivable purchase and for some presently inconceivable purpose.

When mobile phones had to be carried in briefcases, no one imagined that literally everyone, including children, would have one. The same will be true of Bitcoin. The logic goes like this: “Everyone needs to use money, everyone is on the internet. Everyone needs to spend money on the internet, Bitcoin is the money of the internet, everyone needs Bitcoin.”

The implications of Bitcoin and mass adoption are harder to flesh out, but we can say for certain that Bitcoin means the final death of government fiat money. It means the death of banks as we know them today. It means the end of inflation (an increase in the supply of money). It means the end of Big Government. It means an era of unprecedented prosperity, as savings once again become the source of investment.

Then there are the impossible to predict consequences of not only the economic effects of Bitcoin, but the fact that a programmable money substitute is a global tool. One service that offers a glimpse into this is Purse, which opens up eCommerce to everyone on earth, because Bitcoin is a guaranteed payment that can be made conditional through MultiSig transactions. The other programming functions coming to Bitcoin, like paying in the future, will by themselves cause new services to emerge that no one can imagine.

People who are computer and economic illiterates can’t understand even the most basic premiss of Bitcoin; but they don’t have to. They don’t understand how GSM in their phones work, or the A5 algorithm that scrambles and descrambles their voices and have no problem using a cellphone. It will be the same with Bitcoin. Bitcoin will just “be” and that’s it. You will just use it, be paid with it and in it, and you will accept it, just as you accept email, cellphones, internet chat apps and all the other fantastically complicated things that are taken for granted.

When you pay with a credit card on line, you never think about what the green lock means and how many steps and technologies are used to keep your information safe. You don’t think about how credit cards work, how UPS routes packages or anything else. You blithely go about your business buying what you want to buy. Bitcoin will be another layer that everyone accepts, and they will accept it, because everyone else is using it, and in order to participate in society, you will need to use Bitcoin, just as it is when you receive a phone call; if you want to receive phone calls, you must accept that you need a phone and a number or an app. You don’t question how it works under the hood, you just use it.

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