By Niki Gomez
I do believe Bitcoin might be as important an innovation as the Internet itself. When I first heard that claim, I felt that was an overblown. Now I agree it’s possible.
Even if Bitcoin is not the currency we use going forward, it has already disrupted the way we think about money.
I was asked to give a talk about Bitcoin and Innovation at Portsmouth Business School to a group of MBA students and external ticketholders.
Only about 20 of the 70 attendees knew what Bitcoin was. None of them had any yet.
During the talk I offered them the chance to go grab some Bitcoin from my digital wallet, if they could figure out how to do so! It’s still not that simple to get a wallet and figure it out. That’s why Amir Taaki and Cody Wilson have raised so much on Kickstarter for their project Dark Wallet, which will simplify this process.
I spoke about why a digital or crypto currency has taken off now, mainly due to the recent financial crises and loss of trust in the banking system. And that it’s a very secure system, it was designed to be a currency.
I spoke about the main innovations as I see them of Bitcoin:
Simplifying the system- by using Bitcoin to make payments, way less players now get involved in a ‘simple’ payment transaction between 2 people. This brings down the transaction costs hugely.
We have moved from a commodity-based currency to a political-based currency to a mathematically-based currency – we are putting our trust in Maths to verify the transactions, rather than in governments or banks. As Bitcoin is non -hierarchical it is not developed by a government. Governments can’t manipulate the money supply for political reasons or to win wars. It’s not a tech-start-up either. Nor is a private bank behind it (as far as we know). The founder set up the system and disappeared, leaving it for us all to us. A beautiful story.
It could really change the way we relate to money – Bitcoin has a money supply that grows at a steady rate that is predicted, and is fixed at a certain date in the future. It is thus non-inflationary. Inflation has crippled our savings historically and caused us to spend rather than save.
Open Source money – it’s ‘the people’s job’ to peer review the code and make sure it’s secure, and that it doesn’t favour any one party, or provide back-doors for a minority of vested interests.
It’s transparent- there’s been a lot of hype about how black money can hide in Bitcoin. However all transactions are publicly available and so it’s not anonymous, but rather pseudonymous. Swiss banks are much more anonymous.
Bitcoin is for everyone to use, there is no one controlling the system making it exclusive. Now 1/3 of Kenyans have a Bitcoin Wallet for mobile transactions. The barriers to use Bitcoin are technical- both in knowledge and access to digital technology.
Overall Bitcoin can be seen as taking the power back to the people in terms of choice of a medium of exchange and a measure of value. However the crazy fluctuations in its price seem to indicate that it is seen as an investment opportunity than as a medium of exchange right now. It is very early days though and we are watching with interest.