People who are new to Bitcoin are led to believe that Bitcoin is just a currency or a store of value. This couldn’t be further from the truth. Bitcoin, as a currency, is just the beginning. It is only Bitcoin’s first “app,” like email was how the Internet was first introduced to the masses. The Internet is so much more than just email; similarly, we haven’t even scratched the surface to what Bitcoin is. Some of these features are available right now, while some are being developed for future applications as we speak. Just like the Internet didn’t have YouTubes and Facebooks back in 1994, we’ve only just begun to transition from “The Information Age” to the “The Bitcoin Age.”
Top 10 Things Bitcoin Can Do
So let’s delve into the Top 10 things Bitcoin can do besides be a high-risk, high-yield investment, and a medium of exchange for common goods and services. This should help the new-to-intermediate user of Bitcoin have a better understanding of how Bitcoin and its ecosystem will work in the real world as we go forward.
1. Empower the 3rd World, from the Ground up, through Digital Crowd Funding
Imagine you are a resident of an impoverished 3rd world nation. You don’t live near a metropolitan city. You live 50 miles from the nearest bank. You don’t own a car. Your local dirt road is flooded out by rain 3-4 days a week. You nation’s currency is going through inflation at close to 10% annually, and you don’t get much of it to begin with. You support your family from a small farm you own that provides food to live on, but could provide more if you could invest in grain, materials, and more land. You know one person several miles away with a computer, an internet connection. You can get to him once a week, when you shop nearby his location. He lets you use a computer if you need, but you never had a need…..until Bitcoin.
Now you can get a free Bitcoin wallet online, have a webpage made, and you can put your QR code online. You can have an ad to gain donations from anyone, anywhere in the world! A few dollars of Bitcoin may be worth hundreds of currency units in his land. In many foreign lands, $10 in Bitcoin would change the lives of entire families for 2-3 months. Websites, networks, and partnerships are being built worldwide to make these capabilities of Bitcoin easier to realize every day.
2. Give an Instant Bank Account to the Masses
There are about 1 Billion people who have total access to international trade, credit, and the latest technology through commercial banking and lending. Once you leave the U.S., Japan, the U.K. and other highly-developed nations, people deal less and less with bank accounts and traditional lending. The World Bank estimates that there are 2.5 Billion people worldwide with no bank accounts at all. That’s one in three people on Earth. These people live totally outside of the monetary system as we know it, and another 3 Billion only have limited access and ability to transact without capital controls. These 6 Billion people are what Bitcoin is REALLY here to serve.
With Bitcoin, you don’t need a bank or credit. With Bitcoin, you ARE the bank! No credit check, ID, age requirement, citizenship papers, or passport are needed to have a Bitcoin wallet, or any Bitcoin. This gives you access to a sometimes-appreciating asset class that is not debt-based. It allows anyone worldwide to work independently of government currency controls. Governments fear Bitcoin because they don’t control it. Break down the word “Government” form the Latin origin. “Govern” means “control”. “Ment” is equal to “mind”. Governments are here to control your mind. Bitcoin is not here to be controlled, and doesn’t really care abut your area’s government designs on mind control. Neither are human beings, unless they choose to. If you control your money, and bank account, you have true economic freedom. Bitcoin gives EVERY PERSON this option. The choice is yours.
3. Bitcoins Can Hold Incredible Amounts of Information for Transfer.
Up to 1000 pieces of digital information (subject to change) can be held inside of a Bitcoin transaction! Signatures, digital keys, pdfs, contracts, the possibilities are endless for sending not just currency, but information anywhere worldwide, in seconds, for virtually nothing.
4. Allows People Who Can’t Get Approved Other Ways to Start a Business
Maybe you are a coder who wants to make a great “app”, but have no money or credit. Now with a Facebook page, a QR code, and a dream, you can drum up grassroots support for the next great Bitcoin program. Whether it’s a way to process micro-transactions quickly and easily, a new crowd funding platform, or a partnership with your lawyer friend to do Bitcoin escrow management, no credit check or bank loan is required.
Offer a good or service, something of value, in exchange for Bitcoin. This is the fastest and easiest way to get started with Bitcoin. It’s not about changing dollars to Bitcoin. Instead, build the Bitcoin community, and start new economic activity within Bitcoin’s ecosystem. And it allows you to “opt-out” of the status quo, philisophically.
5. Easily Use and Convert Other Digital Currencies like Litecoin, Dogecoin, Peercoin, etc.
In order to enter the “altcoin” market, and experience all the features digital currency have to offer, you’ll need some Bitcoin. Bitcoin is to digital currency what the U.S. Dollar is to fiat currency worldwide. It is needed as a liquid asset to move and convert easily between different currencies. Going from a fiat currency straight to Namecoin would be much more difficult than converting BTC to DRK.
Going forward, you may want to keep Bitcoin as a store of value, but use Litecoin to buy milk or bread from your local convenience store. Bitcoin may not be the best currency for all situations, and something less valuable, and with quicker transaction times may be more desirable as an alternative in the future. Just like you wouldn’t use a $100 bill to buy a slice of pizza or leave a tip, smaller “altcoins” could have more and more real-world value. They will be used more as transactional currencies in the future, as Bitcoin continues to grow in value, and fresh supplies dwindle.
6. Two Words: Bitcoin IPOs!
Offer stocks, bonds, and IPOs for your country without any established stock exchange seat needed. Receive financing from anyone worldwide, buy and sell shares of your company. Take new investors for a day, a week, or on a timer! Sell your “app” or business model outright, or just gain partnerships to infuse capital and awareness to your vision. The possibilities are endless.
7. Program Your Bitcoin in Advance for Family Use
Have a family wallet with pre-set spending limits. Your teenage daughter can only shop at certain mall stores at certain times with the family Bitcoin wallet. Your daughter in college can only buy books at the school store, not beers for the frat party on Saturday. Digital currency is designed to be easily programmable by the owner for many different parameters. Limits are not a Bitcoin thing, but it will give you those options.
8. “Smart Contracts” Provide Many Business Options
If you go to the vending machine and give it a dollar, you are entering a primitive version of a “smart contract.” You send the dollar to the machine and enter into a contract. The machine has the keys to your change and your product and releases them when you send the payment to fulfill the contract you desire. Bitcoin can have a similar, but much more advanced smart contract, for your car, for example. Nick Szabo coined this concept back in 1997.
If you get a car, it will have a digital key for you and your bank. If you fail to make the payments, your (digital) keys to the car revert to the bank’s Bitcoin account until you make amends with the bank. No more car theft, which builds on the current engine immobilizer concept, a similar primitive form of a smart contract, like the vending machine example. This can apply to homes or anything with a loan where more than one party has a claim to the property over a span of time.
Want to send some Satoshis to your local Wi-Fi spot for web access or tip someone for great online content? Now you can with digital currency microtransactions. Today, if you wanted to send someone a few pennies online for a great article, it would be difficult to do quickly in the current monetary system without going through a 3rd party. Many common merchants wouldn’t accept payment in pennies because of the oppressive fees involved in each merchant-processed transaction. Many common merchants have an $8-10 minimum purchase for debit or credit, just because of the onerous fee structures they face.
Now you can send a tip to anyone in seconds, support your local business for good service, or buy 5 KB of bandwidth for a short stint online with ease… with escrow. Bitcoins can be broken down to the millionths (Satoshis), which may become more and more important as Bitcoin value continues to rise steeply in the future.
10. Manage Wills, Deeds, Corporate and Legal Disputes Through the Blockchain’s Multi-Sig Technology
If you have a business owned by one person, but that has many investors, stockholders, salaried personnel, then you might want some separation of power. What happens if the owner is the one who not only owns the company, but also does all of the payroll himself? What if he is severely injured, or dies? What happens to salaries owed? What happens to existing invoices? Businesses that run on Bitcoin can use Multi-Sig technology to solve such legal disputes.
You can have a requirement for multiple signatures to perform a transaction. Instead of one person centralizing all of the company’s power, or ownership, transactions can happen if two out of three signatures are secured. If the owner is out of the country for a month, or in a coma, two other vested parties can still perform essential company functions. You can have three out of three signatures required, three out of four for the Board of Directors, and so on.
Could you do the same thing using a bank? Yes, but then you are subject to multiple layers of banking regulations, paperwork, clerical errors, and potential influence by unseen forces from government or stockholders. Using Bitcoin multi-sig gets you more direct access to funds and resolutions without the delays common with traditional counter-parties of today.
What’s important to understand here is Bitcoin is not a conjured-up online experiment. It is a new digital ecosystem that will allow people to have the same flexibility and economic power as nation states. Privacy that is currently being stolen at a geometric rate is infinitely enhanced through encryption. Limitations aren’t built into the system through location, age, identification, or language. Instead, everyone in the Bitcoin distributed network gets a chance to succeed, and the establishment has no built-in advantages.
Photos courtesy of Flickr, Shutterstock, Telegraph.co.uk, and M.niusnews.com; Other images from Shutterstock.
Additional Source: Andreas M. Antonopoulos