Ancient Lasers

As the world tran­si­tions towards a com­pletely dig­i­tal, glob­al­ized net­work, one thing that has con­tin­ued to be rather con­sis­tent has been cur­rency.  Many peo­ple don’t stop to ques­tion the cur­rent mon­e­tary sys­tem, or its rel­e­vance to such a rapidly chang­ing land­scape of busi­ness.  Yet, a few peo­ple have been rethink­ing the role of cur­rency as we tran­si­tion towards a truly dig­i­tal age.  We don’t actu­ally trade gold for scarce goods any­more, so why should we still trade dol­lars and coins?  Aren’t those sim­ply arbi­trary place­hold­ers for value?  We are rely­ing on phys­i­cal goods less and less, and their scarcity is also decreasing.

Advance­ments in 3D print­ing tech­nolo­gies will com­pletely redesign the busi­ness mod­els for future soci­eties and economies, forc­ing us to find value in non-physical, often intan­gi­ble prod­ucts.  In Pandora’s Mil­lions, by George O. Smith, a ‘mat­ter dupli­ca­tor’ cre­ates an eco­nomic col­lapse and cre­ates a new form of barter econ­omy for the only scarce prod­uct left: skilled human labor. In this sce­nario, one would need to develop a new, dig­i­tal currency.

Simone Syed is a futur­ist and con­sul­tant for Bitcoin.com, a new startup tech­nol­ogy that could rev­o­lu­tion­ize the way we do busi­ness.  I got to ask her a few ques­tions about Bit­coin and find out why it might be a good idea to pay atten­tion to this new form of currency.

• What is Bit­coin, and how does it work?

“Bit­coin is tech­nol­ogy that makes it pos­si­ble to trans­fer value across a nor­mal Inter­net con­nec­tion. This is much cheaper and more secure than using some­thing like a credit card.

For exam­ple, every time you pay with a credit card, there’s a risk that the other per­son copies your card and starts spend­ing your money. With Bit­coin, you’re never giv­ing out the keys to your entire vault — you only trans­fer exactly the amount you want to pay. This vir­tu­ally elim­i­nates fraud and thus reduces fees. And with the addi­tional rev­enue, mer­chants can lower prices and spend their profit on qual­ity and service.”

• Why should peo­ple use it?

“This is really two ques­tions; the first being: “why should mer­chants use it?” The obvi­ous answer is lower fees, reduced setup cost and ease of use. With Bit­coin pay­ments, the only thing required is a com­puter or mobile phone with an Inter­net con­nec­tion. Addi­tion­ally, the pay­ments can’t be reversed, which is a major source of lost rev­enue for many businesses.

Sec­ond: “why should the cus­tomer use it?” It gives the user the abil­ity to pay quickly with­out putting their account and iden­tity at risk. When you pay with a credit card, check or other clas­si­cal pay­ment method, you are plac­ing your­self at risk for iden­tity theft and fraud­u­lent charges.”

• Is it safe?

“Bit­coins are as safe as their stor­age medium. If you store your Bit­coins in a vault at a rep­utable Inter­net bank they can be very secure. On the other hand, if you keep your Bit­coin wal­let unpro­tected, it’s pos­si­ble that some­one steals it from you or that you lose it. This is very sim­i­lar to phys­i­cal cash. The biggest risk right now is that Bit­coin is still very new and peo­ple are just start­ing to learn how to securely use and store them.”

• Why couldn’t another copy­cat come out and make Bit­coin obsolete?

“Bit­coin ben­e­fits from some­thing called a net­work effect. Since a lot of peo­ple already use Bit­coin, it’s much more valu­able to join and trade with those exist­ing peo­ple, than to start a new sys­tem and have no one to trade with. Also set­ting up a net­work of Bitcoin’s size is expen­sive: Right now the net­work ensur­ing Bitcoin’s secu­rity has more com­pu­ta­tional power than that of the world’s top 500 super­com­puter projects combined.”

• Do you think it will encour­age crim­i­nal trans­ac­tions, and make it harder for the gov­ern­ment to trace ille­gal pur­chases (drugs, weapons, etc)?

“Bit­coin trans­ac­tions are actu­ally more trace­able than cash trans­ac­tions. There’s a pub­lic ledger where both par­tic­i­pants of every Bit­coin trans­ac­tion and the amounts sent are recorded. Also, Bit­coin is just a pay­ment tech­nol­ogy — all the bits need to be con­verted back into cur­rency at some point, and all the exchanges are required to strictly com­ply with the same Anti-Money-Laundering and Know-Your-Customer reg­u­la­tions that banks and other busi­nesses are sub­ject to.”

• Why can’t the Bit­coin go down in value?

“Bit­coin can cer­tainly go down in value. It’s actu­ally been rather volatile lately. But since Bit­coin is mainly used as a trans­ac­tional medium, the spe­cific exchange rate doesn’t mat­ter to most peo­ple. In the end, you are just send­ing bits across the Inter­net and at the other end you get the amount of Dol­lars or Euros that you intended to send.”

• Tell us about your mobile app.

“So far Bit­coins have been mainly used by pay­ment experts and tech­nol­o­gists, but we’d like to make Bit­coins use­ful not just for peo­ple who care about the cool tech, but the aver­age per­son. Over the next few months we’ll roll out our whole suite of mer­chant and com­merce tools on http://bitcoin.com/ and you’re more than wel­come to sign up so you can be among the first to give it a spin.”

• Do you fear a crack­down by the Fed­eral Reserve?

“Not at all. I think peo­ple are overly wor­ried about such things. When peo­ple first started pay­ing using plas­tic cards, that must have seemed like a crazy idea as well, but after a while peo­ple got used to it. It’s quaint that we still use paper checks while the rest of the world has moved on to dig­i­tal bank­ing, but with Bit­coin we have a chance to leapfrog and truly improve our country’s pay­ment infra­struc­ture, stim­u­late com­merce and cre­ate new jobs.”