One of our readers sent us this excellent assessment of the significance of Bitcoin:
I first heard about Bitcoin in the media coverage that followed the now infamous hacking of MtGox in the summer of 2011. The commenter described Bitcoin as most people do, the worlds first peer-to-peer digital currency, and in the instant those words entered my brain, seemingly before I could consciously descramble their exact meaning, the butterflies were already in my stomach and the world as I had known it, had changed.
I am 36 years old now, and coming from a background in computer science in the early 90's, I have keenly witnessed and participated in the rise of the internet, both as a commercial entity and as a fundamental public and private information infrastructure. Most importantly, I have watched as big corporate interests have been continually undermined by the movement of free software, both legitimately as with Linux or MySQL, and the illegitimate world of software piracy and file sharing services. These opposing interests have even overlapped as we have witnessed many small software developers become industry leaders on the back of the piracy of their own software, a culture which enabled a generation of workers to become trained and proficient in these software platforms instead of being locked out of expensive and closed proprietary systems. I believe that Bitcoin can revolutionize finance in much the same way, democratizing the tools and access to core systems that anyone, be they a multi-billion dollar corporation or a common citizen, can develop and utilize for their own purposes.
It has continually amazed me that corporations and governments have failed to recognize the futility of their attempts to regulate that which cannot be regulated, such as the many failures of the music industry to acknowledge the fundamental shift in their market, and their repeated failures to adapt appropriately. Add to that, the continuing failure of regulatory efforts to shut down these services, and the ongoing failure to recognize that these technologies are endlessly adaptable to whatever restrictions may be imposed upon them. The brilliancy of Bitcoin has solved a problem that I thought might have been impossible, the ability to remove trusted authorities from financial transactions. While I cannot say for certain that Bitcoin will survive as it is, I believe that the idea, in whatever form it may take, will survive and indeed, change the world. I do however, have good reason to believe that Bitcoin will succeed and that the lessons learned from previous peer-to-peer services have found their way into the Bitcoin protocol, I do not necessarily see it as the Napster to some future BitTorrent.
Having no training in economics, I cannot critically analyze Bitcoin from an economics perspective, but as I learn more about it, one truth seems painfully clear; the corporations and government agencies that have been minding our global economic interests during my lifetime have fundamentally failed. For the first time in history, we as individuals have access to tools which will allow us to truly take hold of our own wealth, and participate directly in the system that controls it. Like the changes that file-sharing brought to the music industry, I believe that this is the start of a fundamental shift within the world of finance, one that cannot be undone. Furthermore, it seems as though forces are aligning against the status quo, that the house of cards has fallen and new digital economies are staging themselves for a takeover of the existing, broken financial systems.
As I sit here, I am reminded of those heady, early days of the world wide web when everything seemed possible, and indeed everything was. The attitudes of the Bitcoin pioneers and the attitudes of the Bitcoin detractors are so eerily similar to those early days of the web that I am filled with an incredible sense of nostaglia. There have already been some hard lessons: bubbles, hacks, scams and thefts, but still we trudge forward, and though I suppose that nothing is certain, I for one am betting that Bitcoin will succeed.