I admit on the technological side I'm not totally bowled over by bitcoin from an end user point of view. As mentioned, there were reasons why I didn't buy into bitcoin at $80, instead it was closer to $3k.
I find some of the terminology goes over my head and the private keys element is a risk by itself, particularly for someone used to the convenience of third party banking. For a non-technically minded person like myself it is somewhat a leap of faith - cushioned somewhat by not putting large amounts of money into it.
But in comparison, if someone laid out a white paper for a 400-tonne of steel to fly passengers safely over the Atlantic, having never previously occurred, I may be inclined to buy into the concept of it although not necessarily convinced of the technology.
What assures me of the technology is witnessing and participating in its continued existence and, over time, experiencing the improvements made to that technology. Aircraft are now long established safe modes of transport with very low risk of crashing. Bitcoin, still in its infancy, does crash but yet the technology survives, the "mindless hashtags", being necessary to secure the network, reward miners and underpinning the concept of ownership, or proof of work.
If there was a fundamental flaw in the security of this network my guess is it would have emerged by now. Its possible it may emerge at some future point. Confidence is built over time and reliability. The longer the reliability over time the greater the confidence.
If technological solutions emerge to deal with the somewhat clunky awkward engagement with bitcoin then it will keep making in-roads in becoming mainstream.
In his own words, being involved at the very beginning of bitcoin, he stated that if no-one is using BTC then it is not working.
That makes sense, he understood it for what it was intended but if it wasn't circulating then what was the point of it?
Take FB as an example. MZ (notwithstanding the subsequent legal wrangle of ownership) gave away considerable stakes of FB for what now looks like, well, pizza-valued amounts of seed capital, compared to what FB is now valued.
MZ understood if people were not using FB then it was effectively worthless.
It's not clear if Hanycez dispensed of his entire store of bitcoin for the pizza either? The chat exchange below suggests he did not.
My understanding is that the pizza purchase was not a consequence of being caught short of cash and having a dose of the munchies after a hefty session down the local.
Instead the pizza order was made from the UK to a pizza establishment in US and the bitcoin was transferred to the person ordering in the UK. I may be incorrect in that.
It was a trial experiment. Could someone send large amounts of bitcoin over the network securely to a recipient in return for goods or services? It worked.
Bitcoin pizza order
I'm more intrigued with who ordered the pizza and what they did with the 10,000 BTC they received. I can only assume they too had a grasp of the bitcoin concept, otherwise why bother?
But if I had received 10,000 BTC for roughly $50 ($0.005c per coin) what would I do with the BTC when it reached $1? I would surely be tempted to offload some of BTC to fiat cash?
Ditto when it reached $2, $5, $10, $100, $1,000 etc. And what would other recipients do with BTC as its price increased?
Meaning, has the entire $500bn network of bitcoin been nudged into being from out of the sale of two pizzas?
Of course, this prompts the ponzi 'greater-fool' theory. And at some point people will get burnt/have got burnt. But what is the difference in this and people buying into overvalued stock, of which there are many at high values producing little, if any, profit?
Someone will get burnt.
The question arises, what do you get exchanging cash for BTC?
This is where I buy into the conceptual side of bitcoin. This is also somewhat a leap of faith, but less and less so in an increasingly, more and more so, digitalised world.
This is where we may part our ways as I digress into my "worldly view". But rather than focus on my oft stated position of fundamental flaws inherent in central Bank monetary policy, I will try add another layer to concepts that
may indirectly support the case for bitcoin.
The World Wide Web and the advances of information technology over the Internet is ripping up the rule book on practically every aspect of our lives and in every sector of commerce and science. These advancements are not slowing down anytime soon but appear to be increasing at greater rates.
I revert to well known TV physicist Michio Kaku, and a talk to science students in 2007. The talk is engaging, in simplified form, and somewhat enlightening, to me anyway, as to ways will be living our lives in the future. A 'Tomorrows World' talk if you like.
The future in 2030.
The talk is an hour long and there is no mention of bitcoin.
If you are not inclined to sit the the hour, the talk starts at around 5mins, in earnest by 10mins, and by 30-40mins you will have the jist of what he bringing to his audience.
The critical points for me is that in all the technological advances he mentions that a fundamental reason is to reach out to people, to communicate with people, providing greater levels of information and service.
Stepping outside the price speculation of bitcoin for a moment (and I will post a view on speculation later) - bitcoin is a form of communication. A form of communicating value, or perceived value. It is basic form of communication of supply and demand directly between users transmitting value in digital form.
In the near future, I won't need the CSO via RTÉ to tell me what the inflation rate is. I will know exactly for myself at any given time via bitcoin.
I will know with greater certainty if the new electric car, or if a kitchen fit out, or the price of pizza that I want to buy is providing me value.
The monopoly of Central Bank issued fiat currency will be broken and
all individuals, by themselves and directly so, will determine what is the true value, or what they themselves perceive the true value, of any given good or service to be to themselves.
My car tax was due today, €200. I could have cashed out some bitcoin to pay for it, but my expectation is that €200 fiat today will be worth considerably less in 12 months time relative to bitcoin. But that is my perception, my choice, and I now have that autonomy to decide that.
So bitcoin offers autonomy to ALL individuals, with a smart phone and Internet connection. It is something that the banking and financial sector has come nowhere close to achieving and is unlikely to ever achieve.
From a conceptual point of view this is what gives bitcoin its value. The price attributable to that value is determined by old-fashioned market supply and demand.
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