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​Bitcoin revolution wins over world

Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges.

Published time: July 04, 2014 12:31
Bitcoin embassy in Warsaw. Photo by Patrick Young

Things may be more incremental in terms of acceptance, but the bitcoin revolution continues apace.

Bad regulation involves hacking babies in two before considering the consequences. Good regulation appreciates that the world changes.

The last year/century was appreciably different to the current one, let alone the future age of whose technological marvels we are barely worthy to evaluate, as nanotechnology reshapes our world. Wise regulators act accordingly.

In the world of bitcoin, the first reaction of the government sector was largely one of fear and confusion. Then again it was ever thus with innovation. Early underground trains were mandated with frosted windows lest ladies fainted at the sight of tunnel walls speeding by. On both sides of the Atlantic, governments demanded somebody must wander with a red flag ahead of any self-propelled automobile.

The arrival of a popular electronic currency in the form of bitcoin was a huge step. With a paucity of private sector folks pondering electronic money a decade or more ago, the government nexus had not considered just what would happen when the kindling of alt money finally caught light. Thanks to the block chain, bitcoin has not merely lit the fuse, it has blazed a trail, creating a whole new currency infrastructure which is already being used for all manner of exciting processes.

Bitpesa, to name but one, threatens to transform payments to the emerging world – creating a vast saving for those who have until recently been slaves to the somewhat Dickensian western systems. Every dollar saved on transfers means more money reaching the relatives of migrant laborers in the emerging world, delivering a palpable boost to living standards where every cent counts.

Governments and central banks in Japan and Russia have been amongst those reappraising the crypto currency revolution in recent days. Their incremental opening up to alt money is a healthy sign that the future of money involves the fiat financing of government co-existing alongside their crypto currency cousins. Indeed a recent auction of bitcoin from the bankrupt Silk Road was bought entirely by a Silicon Valley VC Tim Draper, who intends to use the crypto currency to provide an alternative to smaller emerging market currencies.

Yes, there are still agents of reaction everywhere, with the mainstream Western media endlessly obsessed by silly scare stories of drugs and crime at the epicenter of bitcoin trade, when of course the entire value of all bitcoins ever mined is equivalent to a bare few days of the dollar-funded drugs trade.

Bitcoin mining rigs at work. Photo by Patrick Young

Nobody ever seriously suggests closing the Fed and switching off the US dollar (well apart from one Paul family in the USA). Naturally as the likes of the Russian Central Bank points out, money laundering is something we all must remain vigilant about. Nevertheless, as the Japanese government has also made clear, the future of money involves digital stores of value and transaction agents. Moreover, while the US may have sent out mixed messages about digital money, the fact that citizens can now donate bitcoin to political campaigns tells us all we need to know about how the political classes value crypto currency.

Nobody accepts gummy bears as electoral currency, but in bitcoin Washington trusts for its own self-sustenance at the ballot box.

The bitcoin revolution is now approaching a fascinating post nerd point in its development. Competing currencies are at different stages of development but all have similar issues going forward. The nerd era needs to give way to the broader acceptance by the public and that means better interfaces and more popular means to access, store and use cryptocurrency.

The Fascinating AuroraCoin has stalled as the purchasing infrastructure is not yet properly advanced. Likewise with bitcoin, while small entrepreneurs like myself are in the vanguard of accepting its usage, new payment providers have borrowed too much from the old era of infrastructure when micropayments – wafer-thin charges and instant access to the proceeds – are the way forward for all intermediaries. However these are mere ‘teething troubles’ as the revolution continues and bitcoin becomes an established instrument of global commerce.

The competition for our wallets is developing incrementally as the revolution is building pace. Competition is good for every citizen and consumer. Governments are no longer at the center of the money chain via their Central Banker cousins and that means better government, as opposed to willful devaluation of citizens’ savings as practiced by the political classes of all hues for decades. In that sense, the Copernican revolution in cash is gaining pace as never before.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

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