Dear “financial experts” who write off Bitcoin,
Do you ever look at Bitcoin, not as a commodity or currency, but as a backbone technology, very much like the technology behind the internet (except this technology happens to be pre-commoditized)? Many detractors focus entirely on economic theory, and admittedly insane price gains that point to an unsustainable price bubble (tulips and Beanie Babies are often brought up). However, these arguments 100% ignore the technical relevance of a system that allows extremely low-friction and low-fee digital payments, in a world that is become more and more about digital connections.
Admittedly, the interfaces and trading mechanisms for Bitcoin have been somewhat clunky and difficult. And user adoption is still extremely low. However, I think tomorrow could well be a very different story. There have been many tens of millions of dollars invested by VCs in the past six months to forward technologies based on Bitcoin. Plus thousands independent developers are working hard to come up with new Bitcoin technologies. These people are often the brightest of the bright.
Sending money to anyone using Bitcoin is as easy as sending a text message. Yes, it’s actually that easy today, if you happen to have a specific smartphone messaging app (Gliph) connected to a funded Bitcoin exchange. So if I have no cash, I can just send a text message with a specific value (denominated in any currency) to pay a friend for half a dinner bill. Or I can send Bitcoin to anyone in the world in need, they just need a smart phone and an internet connection. There are no PayPal or credit card fees, no waiting for wired funds to be available, no middle-man at all; it’s almost like directly handing someone cash through the internet. That capability has been around for months now. But this type of payment will become much easier in coming months and years.
You don’t want to hold Bitcoin because you fear it’s a bubble or it’s just too volatile? As we progress down the road a bit, people will be able to instantly trade in and out of Bitcoin, if they just want to use Bitcoin as a transfer mechanism (BitPay and other companies have enabled merchants to do this for quite a while). Or people could keep some amount of savings in Bitcoin, if they believe the currency will continue to appreciate in the longterm, as the trend has been.
This payment functionality is just the tip of the iceberg. It’s hard for me to even imagine everything that can be built on top of Bitcoin in coming years, just as it was hard to imagine everything we do with the internet today, when the internet was in its infancy (You may be too young to remember, but there was awhile when buying something over the internet using a credit card seemed extremely scary, and most didn’t even consider it. Now almost everyone buys merchandise and connects to banks and investments online). I think when you consider the implications of the technology behind Bitcoin separately from looking at the traded value, it gives an entirely different perspective. Comparisons between tulips and Bitcoin are fair when one focuses only on the run up in price. But that seems to be a very myopic way to view an emerging, disruptive technology.
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