The common Bitcoin debate is around whether it’s a viable currency or commodity and if the $1100 peak was just speculative insanity. (eg. an NYT editoral by Nobel Laureate Paul Krugman)
Then the technology experts chime in and say Bitcoin is so much more than a tradable commodity… it’s a “protocol” that solves the “Byzantine General’s Problem” with a “distributed general ledger” and THAT’S a big deal. (eg. an NYT editorial by Marc Andreessen)
Good luck digging in to that… I hope you’ve got some motivation, time and cryptography knowledge handy!
There’s an easier analogy if you’re vaguely familiar with the evolution of Linux and Windows since the late 90s. Remember when Linux was a polarizing new crazy idea and Windows had 95+% market share?
Let’s imagine for a second that Bitcoin today is like Linux in the late 90s, and the US Dollar is like Windows…
Microsoft Windows was the hegemonic end-all operating system like the US Dollar is the hegemonic end-all global currency.
Linux is free software built by a bunch of random people around the world, just like Bitcoin is free software with a mythical anonymous founder named Satoshi.
The analogy is relevant because:
Windows and Linux are operating systems. You need them to make computers do stuff. Linux is free, so companies could do more interesting things without being beholden to Microsoft. A lot of that stuff happened to be on the internet.
US Dollar and Bitcoin are trust networks. You need strong trust networks so people can confidently exchange stuff and do business. Bitcoin is free, so companies might be able to have more interesting exchanges and marketplaces without being beholden to banks and governments. A lot of that stuff will probably be on the internet.
Today, the media seems to encourage two polar opinions on the fate of Bitcoin: either it fails, because it’s a baseless ponzi scheme that will crash to $0, or it wins because it frees the people from fiat currency and evil banks.
The old Linux debate encouraged a similar response: either it would be a toy never suitable for real business, or Linux/open source would free the people from Windows and evil Microsoft.
18 years later in 2014 it seems like we’ve landed somewhere in the middle of a much bigger pie than we started in.
Microsoft Windows is still here and people don’t run Linux on their PC (even though the cloud services behind their PC do), but Microsoft has a healthy $300,000,000,000+ market cap.
Linux is a big deal too and powers $1,000,000,000,000+ worth of new consumer internet companies, enterprise cloud companies, big data and Android smartphones.
The point is that Bitcoin wonks are on to something… and banks and governments won’t even come close to dying as a result… so don’t worry about them.
Bitcoin is a big deal because it helps people create exchanges with less constraint (for free).
(Worth noting that Linux did mostly kill Unix… so perhaps Paypal is a good analog for Unix in this case… sorry Paypal/Ebay, Bitcoin might kill you!)
The innovations that win (and how they convert to real value to the innovators) are largely unpredictable though some people might be on to the right ideas already.
Imagine a world where Amazon, Google and Facebook were beholden to Microsoft’s licensing fees and non-internet optimized view of the world… would they have survived and thrived?
(Can banks and governments stop Bitcoin in its tracks? Consider that Microsoft created Internet Explorer 6 and invented AJAX, two of the key Trojan Horses for Web 2.0. Competition simply creates unpredictable and unforeseen openings like that where even governments aren’t immune in the long run.)
(It’s also worth mentioning that Bitcoin has many flavors just like Linux because they’re both open source… like Litecoin, Peercoin, Dogecoin. It’s unpredictable which flavor will do the right things, but I imagine many derivatives will survive for different uses just like Linux.)
I’m a co-creator of Linkchat, a place to share and discuss links like this with small private groups of friends. It’s a live “alpha”. Download it for iOS (Android some day)… and tell us what you think: chrito at gmail com!
