The Future of Bitcoin: It’s Not What You Think

October 8, 2014 02:00 UTC

Before I even mentioned Bitcoin -like I just did- take a stroll with me down memory lane and let’s look at past technologies for a moment. Remember when you got your first AOL account when you had to dial-in? What about your first email address, which was more than likely a combination of your name and the year you were born? How was email any different than pen and paper? Both contain messages that hold value and meaning to the reader and are both bidirectional. But an email is instant, and snail mail was just that.

A History in Tech Revolutions

Then came AIM and other chat services and email wasn’t so instant anymore. Rather than asynchronous channels of communication such as email, chat created synchronous channels for online users. Phones have progressed similarly with texting and apps like SnapChat and WhatsApp. In general, we are comfortable using synchronous channels for personal use and asynchronous for formal or business related use.

It was slowly over time that the population as whole started to see the potential behind email. At first it was used for personal communication and B2B communication. It’s arguable who caught on first. Did the corporate world slowly ease everyone into email or was it the people’s mass adoption of email and the internet that made businesses get up and say, “Hey, we should be doing this too!” – I don’t know. But what did happen was massive and led to the complete downfall and subsidizing of the Unities State Postal Service.

I get my statements through email, newsletters and catalogs. I use email as my #1 means of communication with another business. I get my reminders for appointments through email; I can even cancel or reschedule my appointments through email. Wow, isn’t email wonderful? Yes, and those of us who were a part of it were screaming it all the way, so why didn’t anyone hear us? Maybe we weren’t sending the right message. Maybe we weren’t thinking broad enough.

Be honest with yourself, when you first got your email account did you ever think that you’d be using for as much as you do already? And not just email, but the internet. We pay our bills, do our taxes, make reservations, buy groceries, and anything else you can think of, and we do it all online. Back when you were plugging in your phone line, did you ever think that big? What were the points you argued when trying to win people over?

The two points I remember hearing people drive home were:

  1. It’s instant – to which people would say, “But no one is on it.”
  2. It’s free – “Stamps don’t cost much. And again, no one is on it.”

Sounds like arguments we hear about Bitcoin, huh? – I’ll get around to Bitcoin, just wait. If we had thought on a larger scale, mass adoption and widespread use of the internet. If we had told people they could order their groceries online, pay their bills, and watch their favorite movies on demand… they would have thought we were crazy. But we were not crazy and we still are not crazy.

The internet is just one example. We can look at computers, phones, cars, architect, agriculture, and every step in human progression and find a point in time where someone did something that was so revolutionary that it changed how the whole world works – all because they saw the big picture.

Bitcoin is one of these things.

The Great Bitcoin Divide

Bitcoin is a game changer, but we’re not thinking big enough. In fact, we’re losing our message. At this point, I’m going to divide the flock. There are two kinds of people who want Bitcoin to succeed and in these two groups success is measured very differently.

In one group success is Bitcoin reaching $10,000 a coin, widespread adoption and retiring early. To another group, it means something much more, something so deep that Bitcoin could disappear and yet still succeed in their eyes – and these are the people who are thinking on a big scale.

The Bitcoin community has become so absorbed in the price of Bitcoin that it’s all we focus on, and it’s all we talk about. Will the price go up or down? Will losing support at $350 cause a crash and spell the doom of Bitcoin? We rally when we hear Paypal will start accepting Bitcoin payments, and we shout rhetoric’s and make claims that the price of Bitcoin will reach soaring heights. That we will curb the power of the Federal Reserve and end the era of banking. Without commenting on whether I believe this will or won’t happen, I can safely say that it is a possibility, but it’s such a narrow view of Bitcoin.

To Fail and Still Succeed

One could arguably say that AOL has failed, and has struggled to rebrand itself by acquiring a whole host of content properties such as TechCrunch, the Huffington Post and MapQuest (do people even use that anymore?). If you’re asking did AOL as a brand fail, I’d have to say yes, but did they succeed in bringing the internet to everyone and creating mass adoption? – YES!

Bitcoin can completely fail and collapse, but still succeed if it brings change that sticks. Specificity I’m talking about the block chain tech that has evolved thanks to Bitcoin. What we have seemed to have forgotten is that the major innovation Satoshi Nakamoto brought us was the public distributed ledger (also known as the block chain) – not a virtual currency.

For those of you less familiar with the block chain, it’s a public data structure. It’s a database that is shared by all the nodes (miners) participating in the system. The block chain contains every transaction that has ever been executed – making coins traceable. For Bitcoin – it’s a public ledger.

But the block chain can be used for so much more. What is often referred to as alternative chain is a system that uses the block chain algorithm, but for non-financial purposes. It can be used to implement DNS, P2P currency exchange, API, SSL verification authorities, file storage and even a voting system.

Once people get over the fear of Bitcoin being anonymous (it’s only pseudo-anonymous) and realize that the whole point of the block chain is that it’s public, people will open up to the idea of implanting the technology of Bitcoin. Bitcoin is uniquely pseudo-anonymous while being completely traceable – it’s incredible.

Implementing the Block Chain: What Would it Look Like?

Payday

I get paid via direct deposit, and its schedule to go out 2 days before it actually “hits” my account, i.e. the money is sent out on the 13th so I can receive it on the 15th. With the block chain, we can see same day transfers – which means if you needed to request your paycheck early you could without having to wait those two days actually to be able to spend your money.

I currently am on an AT&T family plan and my family send me their share of the cost each month – but they do it through checks because we don’t use the same banks and there’s a transfer fee they don’t want to pay. Wouldn’t it be great if we had some way to send money to all accounts regardless of the bank?…

Government

If you’ve ever been to the DMV or called the IRS you know that the word inefficient is vastly inadequate to describe our government run agencies. For someone who owns the postal system, they seem to lose a lot of mail. I can’t tell you how many times I’ve had to resend information because it got lost somewhere along the “pipeline”. Switching to digital would improve everything but the government has been slow to switch over to email, so maybe we’re dreaming when we think they’ll adopt Bitcoin?

Perhaps the better market for the block chain is for developing countries that have a large population of poor. Bitcoin practically gives people free banking. Governments in struggling countries can get ahead of the curve by adopting this technology and can make taxation much easier. Governments can use the public leader as a way to audit its citizens with minimal cost as well as curb corruption.

Voting

Around election time, the hot topic seems to be voter fraud and requiring voters to present their ID. The argument for voter ID is to crack down on voter fraud while others argue this will exclude the poor from this democratic process. Why not use the block chain? Assign every individual their own address which they then use to cast their vote? Votes would be instant, traceable and convenient – we might see an uptick it the percent of participating voters!

B2B

Too much of Bitcoin if focused towards business to consumer instead of B2B – and that’s a shame because this is where Bitcoin shines. Bitcoin removes the large fees individuals and businesses alike experience with overseas transfers. Multinational corporations like WalMart send billions of dollars to suppliers around the world. How much many could they save in transfer fees and exchange rate risks with Bitcoin?

And this goes for individuals too. As one excited individual exclaimed on reddit:

“Bitcoin and Circle just solved my remittance problem.

I live in Belarus, people. The “Last dictatorship in Europe” according to Connaleeza Rice.

I receive my salary here, in a local bank account tied to a debit card in USD. One of my big problems is transferring my salary back to my US account with minimal fees so that I can make payments on student loans and such.

With Circle, I can now send any amount of money to my Coinbase account to be withdrawn to my local bank account with negligible transaction fees.”

He went on

…”This is a game changer, folks. I don’t care if Bitcoin’s value drops to $0.10, it’s now the only way I’m going to be transferring money.

DO YOU PEOPLE REALIZE WHAT THIS MEANS? I’m literally jittery right now. Western Union is dead.”

And we’re all sitting here thinking, “Yeah, we know… We’ve been saying that!”

But no one wants to transfer their money with Bitcoin when there is a chance it’ll be worthless by the time it gets there. That’s why a stable Bitcoin price has to emerge or else we’ll move on to something else. Which brings me to a point that many people won’t want to hear. The price of Bitcoin is irrelevant, what matters is stability. If you can promise me that I can transfer $1,000 using Bitcoin and receive the exact amount, I’m all in. It doesn’t matter if the price is $0.01 or $10,000 – so long as it’s a constant. But if there’s a risk that it’ll be worthless, I’d rather wait for the traditional money transfer.

In fact, we don’t even need Bitcoin for this; we just need banks to implement the block chain protocol into their systems and we can be transferring USD this way. One bank leading the charge in this is Fidor Bank. Fidor Bank, the first bank to integrate Ripple protocol and has been honored by the World Economic Forum as one of the 28 companies to be recognized for global growth.

It’s Time to Think Bigger

Touting Bitcoin as a new competitor to credit-cards is like a cars salesman bragging about the cup holders in the Corvette Stingray. Sure it can hold my American sized, 64oz, Big Gulp of soda, but that’s not what I would call its “highlights”. And neither is the use of Bitcoin for business to consumer. The adoption of bitcoin with merchants and consumers is a small drop in the vast ocean. We need to think bigger, much, much bigger.

Right now, the Bitcoin community is its worst enemy. Look at Reddit and Twitter and what they are saying. It’s too radical. Bitcoin is at risk as being seen as a radical community full of conspiracy theorist that wants only to irradiate the Federal Reserve and destroy banking.

Just like AOL, Bitcoin could become extinct and still succeed if the block chain becomes widely adopted. If the fundamentals behind Bitcoin that makes it unique become integrated into our society, it’ll change the world just like email, mobile phones, google, and social media has.

Images from Shutterstock.

Last modified: October 8, 2014 13:31 UTC

Posted in: News
@BitcoinWriter

A UNC Chapel Hill graduate, blockchain enthusiast and analyst. I have a background in programming and IT, strong studies in econ, stats and game theory. Currently working as a Social Media Director and pursuing my MS in Online Marketing - busy!

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