BitCoin could make the jump to all-digital currency for us
(Full disclosure: I don’t have any investment in BitCoin, and neither do any of my friends or family that I’m aware of. Is this where I say that?)
I read on Hacker News today that HTML5 just implemented one of BitCoin’s planned improvements by whitelisting the “bitcoin://” URI scheme to go along with about a dozen other schemes already in use (such as “tel://,” “mailto://,” and of course, “http://”). This way, transactions can be made with a hyperlink, which would make it much easier to send and receive payments. Instead of using some kind of special proprietary Web-based form to begin a transaction, it would tap into the already-existing Internet infrastructure to make it immediately accessible to anyone. Just click a link and you’re using BitCoin.
I thought this was great news, until I read and was reminded that there are dozens of other schemes out there already, several of them very proprietary. That’s not necessarily a bad thing, but it does choke out future growth and is, in my opinion, a bad style decision—one that the responsible parties have no incentive to fix. For example, “aim://” handles chat through AOL Instant Messenger, but there isn’t a way to do Facebook chats. Wouldn’t it be more growth- and style-supportive to handle these both with something like “chat://” or “msg://?” “msg://” could even handle “mms://” and “sms://,” and then telecommunications companies would have an easier time transitioning away from SMS and MMS.
In the Hacker News discussion, user justincormack made a suggestion that I really like:
Are we going to have to whitelist every currency that will exist in the future? At least have a pay: schema so you do pay:bitcoin.com/… or something.
Followed by user SkyMarshal:
Exactly. Needs another layer of abstraction to handle competing crypto currencies. [BitCoin] was the first, but won’t be the last.
If BitCoin is serious about this—and by all appearances, they are—they can do one of two things that are reflected in these URI schemes. I want to emphasize that I’m using the URI scheme options here as reflections of broader purpose—I seriously doubt the URI scheme alone would be anywhere near the sole determining factor. This is for illustration purposes only: do not attempt without parental supervision.
First, using “bitcoin://” suggests they want to get in on this at the ground floor and think they could mop the floor with forthcoming competitors, making them work to build their own currency’s brand before it could take off. This looks like a viable option: I think BitCoin will probably be to “crypto-currency” as Skype is to video chat and VoIP, eBay is to online auctions, and Google is to search: not only identifiable with, but more recognizable even than the name of the sector it competes in.
I agree with SkyMarshal that it likely won’t be the last, but I do think that it will probably be the premier crypto-currency for some time at least. Since the BitCoin system was engineered to produce a decentralized currency, then if it succeeds, nobody really has much incentive to compete—that is, the only parties to get a “cut” of the profits from its mass adoption would be the early adopters. Other parties could hope to overtake BitCoin by engineering their own crypto-currency systems, but since BitCoin seems to be reaching a critical mass of adoption, it would take some kind of vast improvement to make another system more appealing. Right now adopters have a much greater incentive to buy into BitCoin than any other option.
There’s really no money or incentive in developing a new currency, except for the prospect of getting in on the ground floor of the gold rush, or manipulating it so you can get a healthy-sized reserve at the very beginning or at any time throughout its lifespan—both of which would only matter if the currency took off. I see any additional crypto-currencies ending up being like Monopoly money, tokens at an arcade, or a gift card for iTunes: only valuable in the immediate context of whoever is sponsoring its development. That is, they could potentially develop value, but unless they are somehow disrupting the newly revamped status quo, they are not going to start getting accepted everywhere.
In other words, “bitcoin://” would probably not have any splintered or competing protocols to deal with. I think it’s a reasonable expectation that the BitCoin name will come out on top of the crypto-currency pile—or rather, that there will be no pile at all.
On the other hand, using “pay://” would suggest a willingness to make this a de facto standard, putting their brand confidence on the line, and making an infrastructure that would not only allow but invitecompetitors to the field. That would put them on a potentially level playing field with any other crypto-currencies, such that if they were confident enough in their system, they would be the de facto standard currency in that position. That is, they would be the welcoming party for all non-corporate (PayPal, Amazon Payments, Google Wallet, and so on) online transactions: they get to set the stage.
Overall, the probability that BitCoin will not be overtaken by any other crypto-currency gives it an incentive not to compete among a subset of crypto-currencies, but among existing international currencies. They shouldn’t want “bitcoin://,” which would make BitCoin basically compete with BitCoin; they should want “pay://,” so that they can get their foot in the door for being competitive against all other currencies.
This would lend it all the legitimacy of being considered alongside the dollar, the pound, and the euro, but would give it an inside track on an additional method of payment. Imagine if the dollar was the only kind of money that could be physically handed to another person, while every other currency required you to memorize every bill’s serial number and orally recite them to make a payment. That’s a little exaggeration of what it could be like to make hyperlinks a standard mechanism for digital currency transactions.
That brings me to an interesting point: I’ve been addressing crypto-currencies competing with old-school currencies, but this could potentially lead the way in digitizing or even encrypting additionalexisting currencies. Who knows? The US dollar has been based on the gold standard, the silver standard, and like now, the fiat standard. Who’s to say the dollar, the pound, or the euro won’t eventually transition into a paperless digital currency, and maybe even to a new “crypto standard?”
For my part, I think it probably won’t, unless a lot of things change between now and then—the most prominent of which would be BitCoin’s success. Disruption usually leaves the former big guys in a lurch, since they can rarely adapt quickly enough to maintain, much less asset their relevancy, and that would be a miracle for most legislatures to pull off. I think it would take not only a overwhelming positive support by the public, but an actual energy in the public opinion to move this forward. But what I can see as possible is for BitCoin to make these other currencies secondary investments, if not irrelevant. I’m painting with broad strokes here and this is long-term thinking, but disruptions of this level always have long-term effects.
It’s entirely possible, obviously, that none of this will take place, since any single small action at such a large scale would have far-reaching ramifications. Any of those could neutralize anything that might happen next. No matter what does or does not happen, though, this is amazing: we’re watching, participating in, and driving the future of basic daily utilities, and it’s on the Web for the whole world to see.
Here’s a new payment scheme. What’s next?
This article was originally posted on The Rolled-Up Newspaper, the only periodical whose sole purpose is to cover literally everything all the time, and then to fail spectacularly to deliver on that promise.