Thursday, August 17, 2017

Bitcoin

I've already been wrong on bitcoin. I knew about it way before the majority of people. I first heard of it on the Security Now Podcast. This was when bitcoin was trading at a couple cents maybe and there was even a website called the bitcoin fountain where entire bitcoins were given away free in order to promote the currency. I remember being so enamored with the technology behind the concurrency and how the day after I went on and on explaining how it worked to my coworkers. At the time I didn't think it would ever really be widely known about and I certainly had no clue that the price of it would be as high as it is today.

I remember reading in Sapiens that the concept of money is inter-subjective. Inter-subjective means that it doesn't objectively exist, however the belief of enough of us causes it to be real. Law, god, corporations and nations are other inter-subjective concepts. It doesn't matter if I decide that none of these exist or if I die. However, if enough people change their mind then the inter-subjective concept can change or disappear.

This is the same concept as bitcoin (or any currency for that matter). In order for it to have value, enough people have to believe it has value. I not only have to believe bitcoin has value, I have to have faith that (enough) other people will also believe.

Today my Dad handed me an article talking about how the bitcoin technology (the block-chain - not actual bitcoin) was being used by large financial companies to record transactions. One of them even allowed their employees to use it in their cafeteria. The other day I heard a friend who is not technically savvy talk about how she wanted to invest in bitcoin. There are plenty of exchanges and payment services available for bitcoin. All signs to the level of inter-subjective trust that bitcoin has built up. I think its amazing that this subjective "idea" didn't exist one day but now it has concrete value since enough people are convinced.

I'm certain that it won't be replacing the dollar ever because it does have some downsides such as computer keys being hacked and some level of technical skill to get setup (although there are many services abstracting this away slowly) but I'd guess that it is here to stay for the long haul as some sort of alternative currency.

Most of the people I know are buying it and hoping for appreciation versus spending it. I think it will take a while for it to stabilize. Until then most people will probably just be holding on to their bitcoins. An unstable currency isn't great for use but great for speculation. I think we'll see a lot more bitcoin use and adoption as time goes by.