Bitcoin: It’s the platform, not the currency, stupid!
Is your business ready to be disrupted? Are you?
“Beware the mania for Bitcoin, the tulip of the 21st century.” This statement was recently made by Jean-Pierre Landau, a professor of economics, in an opinion article for the Financial Times.
Alan Greenspan, the former president of the Federal Reserve also completely dismisses the digital coin: “It’s a bubble. It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.”
There is a lot of confusion about bitcoin. It is really hard to define the “ irreducible core” of bitcoin. Part of the problem is that a clear definition of the digital cryptocurrency and a good explanation of the workings of the underlying platform is missing.
The other part of the problem is that lots of people only focus on the volatility of the currency and the “fact” that the money is invented to support criminal activity.
Most importantly, Bitcoin is still in its infancy, just as 20 years ago when the internet protocols TCP/IP, SMTP and HTTP were introduced. Their impact was not understood at the time. And that’s not so strange.
Futurist Peter Schwartz once said in his book ‘The Art of the Long View’: “The single most frequent failure in the history of forecasting has been grossly underestimating the impact of technologies. […] The reason we underestimate the impact of science and technology is that they are so difficult, if not impossible, to foresee.”
Talking about bitcoin, there are basically two camps. The economists are dismissing bitcoin as a new ponzi scheme, while technologists view bitcoin as the biggest invention of this decade. Who do we have to believe?
Marc Andreessen, co-founder of Netscape and partner with venture capital firm Andreessen Horowitz, made the following statement in his article Why Bitcoin Matters: “Personal computers in 1975, the Internet in 1993, and – I believe – Bitcoin in 2014.”
So what does Andreessen envision that the economists don’t see?
It’s not the digital currency, but the underlying platform that will cause an enormous market disruption. Bitcoin is more than just another currency, it’s “an Internet” for registering and transferring property.
Thanks to the Bitcoin protocol (crucially distinct from bitcoin, the currency it underlies), for the first time in history it is possible to transfer property rights (such as shares, certificates, digital money, etc.) in a fast and transparent way, which cannot be forged.
Moreover, these transactions can take place without the involvement of a trusted intermediary such as a government, notary, or bank. Anyone who fully appreciates these attributes will immediately acknowledge the tremendous value of Bitcoin.
In this research paper we will not discuss the shortcomings of the digital cryptocurrency bitcoin, on “why bitcoin could fail“. Instead we will focus on the underlying Bitcoin protocol, on the platform, and attempt to clarify its importance.
Next: The specter of crypto anarchy