Bitcoin success stories
Bitcoin is now becoming a household name as, once again, the price of each coin is nearing 200 USD and more companies are selecting to accept payment in this convenient, yet new payment option. With the recent closure of Silk Road and the US government’s temporary shutdown, Bitcoin has proven to be a force to be reckoned with.
What makes Bitcoin unique? It is a digital, decentralized, cryptocurrency and a gateway to send money anywhere around the world with just the click of a mouse or the scan of a QR code to anyone with internet access. Proponents of Bitcoin pride themselves in supporting the lead cryptocurrency, which is based on peer to peer transactions. Yet, one must never take the decentralized nature of Bitcoin for granted.
Unfortunately, any system can trend back towards centralization if not carefully monitored and safeguarded. As humans, we can, unfortunately, move towards centralized structures for an, often times, false sense of “security” and “certainty.” Centralization tends to create more problems than naught when the power to make decisions falls into the hands of a select few. History provides evidence of the tremendous failure of central planning with the collapse of the Soviet Union, massive starvation and lack of development in North Korea, and, right now, a bloated US Government with a growing bureaucracy with an accompanied skyrocketing debt. On a US-centric note, how can a Washington bureaucrat really know and meet the needs of a school teacher in California or a farmer in Iowa? In the end of the day, each individual knows what is best for his/her needs and with systems and societies based on greater individual responsibility; in turn, systems that are more diverse will meet more needs than blanket solutions and inefficient “one-size fits all” policies. So, while there is comfort in having to be responsible for less in the short-run, there are too many unintended long term consequences.
Bitcoin is not just a currency, but a movement towards decentralization in society, government, financial systems, and thought. It has served as a catalyst to provide power to individuals seeking to separate themselves from constricting governing bodies and failing central banks. To date, Bitcoin has been characterized as an open source project prompting discussion of the role of money in society, the danger of current banking structures, and the creative decentralized solutions to centralized problems in society today.
A model of organized decentralization is key to the success of Bitcoin around the world. Decentralization does not equate to chaos, but many individuals at work to promote a project with the common goal of strengthening a project and not placing trust in one entity. The best example of organized decentralization would be grass roots activism and organization within the Bitcoin community instead of central actors making all major decisions and protocol adjustments. Each member of the Bitcoin community serves a unique role and has a distinct voice and part to play in keeping the Bitcoin currency on a pathway to success, growth in value and utility, and a global reach. Most members of the Bitcoin community already recognize that the larger the user base, the less volatile the currency, and the greater legitimacy lent to the currency.
Open source software is also vital to the preservation and strengthening of Bitcoin. With decentralization in the development community, there is greater room and leverage for an increased number of individuals to enter the community and contribute. The question, then, may arise as to how the Bitcoin Qt client can remain decentralized. An option which has prompted growth in Bitcoin development is when businesses have given back to the Bitcoin community through hiring individuals to solely work on the Qt client. There is value in the marketplace of ideas as trial and error and diversity of thought inspires the development of the strongest wallets, payment processors, and software. There is too much risk in entrusting all development and protocol to a few. The Bitcoin community must continue its commitment to the open-source ideals that make Bitcoin the resilient system it is today.
As Bitcoin continues to increase in value and central banks continue to disappoint, it is clear that decentralization leads to healthier societies and global financial success. What will become of Bitcoin? To date, Bitcoin is the most successful cryptocurrency and is still in earlier stages of development. What we do know: a model of organized decentralization is vital to the success of the Bitcoin currency and movement.
Cash – it’s almost become a dirty word – associated with avoiding taxes, reluctantly paying for cabs, and obnoxiously splitting bills 14 ways with you and your college friends at a restaurant.
Who carries it? Who even uses cash anymore? In a world of increased “electronification”, why is cash even needed?
To be fair, there is no doubt electronic payments are growing. 175 Billion – this was a recent number I read on a payments report on the EU, referring to the number of non-cash transactions that Europeans would make by 2020. The number here in North America was likewise comparable, and represented a strong trend towards electronic payments.
But further down in the article was a more subtle, but revealing fact that 60% of all payments in 2020 would still be made in cash. With some simple math, that means that over 200 Billion transactions will be made in cash 7 years from now. And that’s inclusive of 7 more years of smartphone growth, as well as 7 more years “attempting” NFC. And still: 1000 cash payments per person on average in the EU and in North America alone!
So why is this the case? The challenge with cash is not for the person who uses it – the payer – but rather the person who receives it – the merchant or payee. I will make a reasonable assumption that most payers by and large prefer electronic means of payment – credit, debit, ACH – over cash. But I feel we often forget that payments is a two sided ecosystem and, in most cases, the ability to pay electronically is not a choice the payer can make, but rather an ability that is either accepted or rejected by the recipient. And thus, the true growth of electronic payments is not about the person making that payment but the person receiving it. That’s why Square’s approach – arguably almost entirely merchant focused – is successful in pushing cash to electronic, while other approaches focused directly on consumer – Google Wallet, ISIS, any NFC play known to man – have yet to find success. Yes the consumer wants to pay electronically, but the merchant doesn’t; or does so reluctantly. Merchant wins. And cash prevails.
But if moving money to electronic means is mostly about the merchant, how easy will it be to create this “acceptance”? Unfortunately cash still has a strong set of incentives that I believe will be challenging to uproot. For one – cash has the perception of immediacy: its very tangibility (although also a major flaw – expensive, dirty, easy to fake) creates instant trust, a message of “you’ve been paid right now”. The removal of cash also comes with the addition of new costs – systems to take electronic money, software to account for it, and more. Of course, there are many costs to already accepting cash, but convincing someone that they are paying too much for status quo is always tougher than incurring cost for change.
Cash is also a market of its own. Like “technology” itself, eliminating cash means eliminating jobs. Now, of course, we can argue that jobs are also created, but largely creating an efficiency in the system means less processing and less labor required. To be clear, I still feel largely that removing cash is an advantage for consumers – a consumer win, no doubt. But in this instance the removal of labor is not always an easy hurdle to overcome for the recipients (especially in large organizations – think governments and the like).
On the whole, I believe that the incentives of electronic payments, although widely “proven” and backed by “data”, aren’t always strong enough to create behavior change, which, incidentally, doesn’t necessarily have a price.
So when will the reign of cash end? Certainly not anytime soon. But if there is a way to accelerate the growth of electronic payments, it will likely happen where consumer change meets merchant status quo. Put another way: giving consumers the ability to pay electronically without relying on the merchant’s ability to “veto” their choice, will create the biggest growth.
Just this week Coin Ava launched as the first Iranian Website open for Iranians to buy and sell Bitcoins.
While Iranian leadership is known for tight regulations on citizens in particular for those seeking to utilize the internet and community with the rest of the world, Iranians have found a way around onerous authoritarian restrictions through the Bitcoin currency.
Last year, Bloomberg Businessweek pushed out an article, “Dollar-Less Iranians Discover Virtual Currency” to conclude, “For now, Iranians are using bitcoins to maintain a fragile connection to the outside world.” Iranian citizens are able to use the Bitcoin currency as a gateway to purchase products around the world and through the Bitcoin currency are not confined to a devalued Rial.
Although unaware of the domestic social and political situation in Iran, outsiders can sense a form of oppression of the Iranian people under the current regime. Due to the current Iranian Leadership, Iran is economically in distress. Fortunatley, in the coming future, there are a few factors that may play a role in an attempt to benefit the Iranian citizens financially, one of which is Bitcoins.
As a former Foreign Policy staff member for a Member of the US Congress, I understand the hesitancy some might have to applauding the growth of Bitcoin in Iran. Whereas it is evident that the current regime in Iran has violated international law through disregarding International Atomic Energy Agency (IAEA) standards and frequently utilizing hate-filled rhetoric, it is also true that there is a sizable group of Iranian citizens who oppose the totalitarian actions of their government and are working to reform their country. The Iranian Bitcoin question is a touchy subject for most, but can be worked through if viewed through lenses centered on the purpose of the Bitcoin currency.
Whereas Bitcoin is a digital, decentralized currency, it serves as a source of empowerment for individuals around the world to take the initiative to control personal finances and become financially independent from a centralized source of control. In some nations, the desire to be independent from a central bank is not as strong as not all nations have authoritarian leadership and high inflation rates. Yet for some nations Bitcoin provides a source of financial security and promise outside of any centralized currency to citizens.
Coin Ava’s launch this week has prompted dialogue once again over the many purposes of the Bitcoin currency and the intrinsic value this digital, decentralized currency holds of citizens living under the auspices of an authoritarian government. From the perspective of a former Capitol Hill staffer who ardently opposses Iranian nuclear development, hate speech, and human rights violations, I see the growth of the Bitcoin currency in Iran as a way for the iranians to single-handedly aid their financial situation. Where there is a will, there is a way, and Iranian citizens have worked to combat Iranian leadership’s poor decision making with the Bitcoin currency.
Since my transition from Capitol Hill into the Bitcoin community, my eyes have been opened to the immense potential of this digital, decentralized, cryptocurrency. Bitcoin not only has the capacity to revolutionize financial payments but also to showcase the numerous benefits of a limited government space. To date, Bitcoin is free from onerous regulation and as a result has grown not only in value but utility for individuals but also businesses.
The Bitcoin currency represents the ingenuity that our Founding Fathers initially envisioned prior to the vast expansion of the federal government. As a peer-to-peer currency, Bitcoin is not controlled by a centralized source. Additionally, peer-to-peer exchanges of Bitcoin take place on an international basis and Bitcoin has the potential to transform what we see as money today. At the center of the Constitution, one finds individual and states rights. Just as the Constitution was put in place to protect individuals and states from an overbearing, centralized federal government, the Bitcoin currency provides an opportunity for each individual to take a step away from the tight control of the federal reserve to invest in a currency that is based on convenience, ingenuity, and free market initiatives.
In an age of increased government regulation, Bitcoin stands as a credible option for individuals to invest in a currency free from centralized control and inflation. If asked point blank, the majority of Americans would rather have less government control over their finances. This preference is accompanied by an understanding that larger government intervention in the economy and the US dollar is not always correlated with economic success. In an age of bloated government policies on both sides of the political spectrum, it is time for each individual to make the choice as to whether or not to invest in opportunities to expand individual liberties and personal freedom or accept the status quo.
With the US Federal Government trillions of dollars in debt and struggling to enforce a budget, we cannot be too trusting of the Federal Reserve to best manage our finances. With taxpayer dollars spent right and left, individuals should have the right to use a currency which is not subject to inflation and is free from excessive processing fees. US citizens cannot truly count on the dollar remaining constant as we have seen international currencies plummet in value. Let’s take a look at the Argentinian Peso. With inflation rates skyrocketing to over 25 percent, numerous Argentinians are choosing to invest in the Bitcoin currency to prevent further devaluing of their savings. With the Federal Reserve more liberally printing money, the US is not too far off from Argentina. Just as inflation has become commonplace for the Argentinian peso, US dollar is not free from inflation.
In addition to exemplifying Constitutional principles, the Bitcoin currency is an asset to small businesses. During my time on Capitol Hill I noted strong political division, but at the same time strong bipartisan support for small businesses. Just last year, when both Chambers of Congress and the Executive Branch struggled to establish a fundamental budget, the US House, Senate and President supported and signed into law the Jumpstart Our Businesses Startups Act (JOBS Act, H.R. 3606) to enhance the ability of small businesses to increase capital. The JOBS Act highlights the critical role small businesses and emerging growth companies play in stimulating job growth and the US economy.
While small businesses serve as the backbone of the US economy and contribute to new employment opportunities, small business owners often struggle with high credit and debit card processing fees. Most of you are familiar with signs by cash registers reading a specific dollar minimum for credit and debit card use. Unfortunately, such minimums turn customers away from making purchases. As we are becoming a cashless society, small businesses, merchants and local companies face an uphill battle of either incurring larger processing fees and costs OR establishing strict guidelines and minimum fee requirements for credit and debit card use. What is the solution: Bitcoin! Not only convenient, but a sure way for small businesses to avoid onerous credit and debit card processing fees.
As the House, Senate and President backed the JOBS Act in the 112th Congress and are now implementing this pro-growth legislation, further consideration of the Bitcoin currency should be on the books for the 113th Congress. As the Small Business Administration sizes up options to best facilitate small business growth, a consideration of the Bitcoin currency will be a wise investment of resources. What if the Small Business Administration decided to revamp the already existing grant and loan program with a track for businesses utilizing the Bitcoin currency? Business owners would have greater leeway in finding the best methods of transaction not only to meet customer needs but also to efficiently collect revenue and in turn stimulate the economy.
With many vendors and small businesses already processing payments through iPads and updated computer systems, imagine how simple it would be for customers and business owners to make transactions at any price with the simple scanning of a QR code. Let’s take this a step further. Small businesses and merchants reaching out to an international audience will avoid high currency exchange rates as Bitcoin is a decentralized and international currency.
While growing in monetary value, the principle behind the Bitcoin currency continues to promote common sense, pro-Constitutional, economic and political liberties. It’s time for both sides of the political spectrum to come together and support a sustainable, pro-growth solution to the woes of individuals and small businesses: the Bitcoin currency! With our executive and legislative branches frequently disregarding the fundamental, limited government and free market principles highlighted in the Constitution, it is your turn to reclaim your Constitutional rights and liberties one bit at a time. Take the step today to invest in Bitcoin to remove the middleman, speed up transaction time, enjoy a portable and international currency and most importantly assert your individual rights in a time when the theme of the US dollar is inflation and centralized control.