The new renaissance: how Bitcoin millionaires will change the world

By Adam B. Levine

Contributing writer for End the Lie

(Image credit: zcopley/Flickr)

(Image credit: zcopley/Flickr)

Despite the stratospheric increase in price and lacking a major disruptive event, Bitcoin is not in a bubble.  Let me explain.

Over the last few weeks I’ve found myself writing about topics relating to Bitcoin quite frequently.  You’ve probably noticed this phenomenon in the news yourself.

Be sure to read Adam’s latest articles, “Ensuring bad outcomes: what Cyprus tells us about the world” and “The controlled demolition of Cyprus

As the value goes up, heads start to swivel and skeptics begin to soften.  Starting a new currency is easy, anyone can do it. The trick is getting people to accept it, because it is their use that gives the “money” value.

Listen to Adam read this article below:

Every person and business that is willing to trade some good or service in exchange for “money” increases the usefulness of every other unit of that currency in peoples’ pockets.  But why would someone want to use Bitcoins over dollars?

More divisible

You can send someone .000000001 of a bitcoin if you wanted to, try that with a dollar.

Very low fees…

…which actually go to finance infrastructure. The default fee for a transaction in bitcoin is .005BTC.  You get a little warning if you try to send something below that. But that was set when the value of a bitcoin was about a dollar, so I imagine you can expect normal fees to retract to .00005btc soon.

Internet cash

Credit cards are not built for the internet and identity theft is common.  I have personally experienced this twice myself in the last few years.

To make fraud more difficult, we give vendors of digital goods way too much personal information they have no real use for, which makes them a more tempting target for online thieves.  Bitcoin, with its unlimited wallets and addresses, gives you quite a bit of anonymity in your transactions without jumping through any hoops.

Zero fees for merchants

When you make a purchase with a credit card, you’re paying about 97% to the merchant and between 1-3% to the payment processor.  The merchant has to build that cost into his prices, so the items you buy are more expensive because of it.

Bitcoin turns that on its head; it is the sender who pays the minimal and optional processing fee, so merchants can accept bitcoins with virtually zero cost.

Faster, cheaper, and borderless

Have you ever sent a wire transfer?  It costs $20 and takes at least 3 days.  If you’re sending money that needs to be changed to local currency you can multiply your cost on the number of banks you go through, and each one of those institutions has a record of what they did for you and who you sent it to next.

To send a Bitcoin to someone in another country is as simple as sending it to a computer sitting next to you.  It can take as little as 3 hours to clear and your cost even at the current “high” default is only $0.50 USD.

Technically anyone can see your transactions, but if both parties use new addresses (as simple as clicking a button and giving it a name for context) there is literally no way to know who in the world is sending what to whom.  You’re hiding in plain sight because every other person to person transaction looks exactly the same as yours.

Anyone can accept payments anywhere

There is no barrier to entry to anyone wanting to build a tool that works with or uses bitcoin. Case in point: I had the idea three days ago to build an embeddable HTML widget.

Here’s the mockup, you see what I was getting at?

Journo-Tipper

I create a new receiving address each time I write an article, label it the article name and where it was posted.  Then I embed the tip jar widget in each post so people who enjoyed my unpaid work can give me some value for my time spent.  Each time someone does that I see it pop up in my wallet with the name of the article and location.  I use this information to figure out where I’m having the most impact (in addition to other metrics).

But as I talked to more people, I realized this is a huge problem that could never be addressed before.  People who provide content on the web more often than not are not paid, and in many cases are going out of pocket in order to keep themselves online.  Accepting donations with PayPal is fine, but who uses PayPal for amounts below $5? There is Flattr, but they take 10% off the top of every transaction and have a centralized point of failure.

Embedding a Bitcoin Tip Jar in your blog, article, YouTube Video description, podcast comments page, etc. allows whatever content you create to accept monetary contributions from all your listeners regardless of what country they reside in.

As a former podcaster who was never able to monetize, I can say that this is a really big deal and it makes all kinds of things possible that you simply couldn’t do before.

Financial derivatives don’t make sense

Broadly speaking, size moves markets. So it’s interesting to note that in this time of monetary chaos following Cyprus, the monetary metals gold and silver have languished.

I believe this is a case of a captured market where the underlying value of the physical, in-hand hard cold metal is being controlled by the enormous size of the derivatives market that is built on top of it.

At more than 100x the size of the real physical trade, it should be no surprise that sometimes the tail wags the dog, and it becomes just another financialized tool rather than a safe haven.

So why is that possible?  If people could buy tangible physical gold they could safely bury in the backyard for virtually the same price as a piece of paper whose value is only as solid as the other guy’s solvency, then why is the “paper” market so huge?

Gold has intrinsic value, and is excellent money by a classical standard. But it also has some downsides:

  • It’s very heavy which makes it expensive to ship
  • You have to guard it yourself or hire someone else to do it
  • It is difficult or risky to transact with it. You have to ship it or go somewhere in real life to exchange in person
  • It’s very valuable, and not very divisible. One small coin is worth $1500 or more. If you split the coin in any way you sacrifice the small premium coins bring over scrap metal

These are great reasons to instead say “This is just too hard.  Let’s put all the gold in a vault and just trade its ownership back and forth.”  This leads to derivatives, which are financial vehicles.  Essentially bets on market behavior, they’re the next logical step as they give exposure to price movement without incurring the costs of ownership.

With that as background, you’ll appreciate how much Bitcoins differ from gold.

Technically it’s not bitcoins that trade hands since they never move. When you send a bitcoin you’re signing ownership of that static fixture to the recipient.

When you have a bitcoin in your wallet, really what you have is a confirmation from the Bitcoin Network saying, “We recognize you and we can all see that you own that bitcoin in this particular corner of the blockchain”.

Since Bitcoin are already the perfect financial product, introducing derivatives based on them captures the reward of Bitcoin, but it introduces the huge issue of counterparty risk which as a protocol Bitcoin avoids judiciously.

Those are some compelling advantages Bitcoin winds up fielding over legacy currencies.  With the price exploding upwards, advocates explain:

“…And now people are waking up to the fact that their money isn’t safe after the mess in Cyprus, so they’re exchanging their paper money for Bitcoins.

“So is it a bubble?”

“No! It’s just a revaluation because as value flows out of dollars and into Bitcoins, it’s people looking at their options and deciding Bitcoin is a better fit for what they need.

“But, it really REALLY looks like a bubble”

“It’s only a bubble if the users find their local currency to be more useful than Bitcoins, and that’s getting less true every day.”

But what are its disadvantages?

  • Irreversible – Bitcoins are like cash, once the money is sent, it’s gone.  There is no “Undo” button, there is no bank you can call to put a hold on the transfer.  I don’t know if that’s a good or bad thing but it’s definitely something to keep in mind!  Low fees and distributed systems mean nobody is being paid to sit on the other end of help line if something goes bad, so the responsibility is on the individual user (that’s you!).
  • Uninsured – If your bank goes out of business, you probably have deposit insurance which swears it’ll replace up to a certain amount (100,000 in the EU 250,000 in the US).  On the other hand, if you’ve only got your bitcoin wallet stored on a computer that requires a wipe, you very well may be screwed.  This is very avoidable by copying your wallet.dat to a safe backup location but we all probably know someone who will make this mistake at least once, and at these prices it’s an expensive mistake.
  • Unaccepted – The value of those dollars in your wallet are guaranteed to you by the fact that the US sits in a dominant world position, and therefore they’ll be accepted anywhere the US has sway.

With Bitcoin there are no such protections, and in fact given their volatile market price it’s quite dangerous for a well intentioned merchant to accept payment in bitcoin without immediately converting it to whatever their local currency is.

There are businesses that provide these services at a low price, organizations like Bitspend.net which describe their service as one which allows customers to, “Send us the URL of any product you want to buy, we’ll send you an invoice in bitcoin, buy it from the vendor in their local currency and have them ship it to you.”

Bitinstant.com takes the other side of the coin, partnering with vendors to let them accept bitcoins and receive some or all of those moneys directly into their bank account in their local currency.   With over 4000 customers brought online in the last 6 months, they just lowered fees last week to 1.1%.

So is it a bubble?

I initially thought so, but good grief is the feature set compelling.  Media attention has been really ramping up as the price increases, I think we’ve passed a tipping point and unless something goes horribly wrong very soon there won’t be any going back.  I think this quote from twitter captures it well:

“There is one basic truth about #bitcoin, and this is it: if it’s worth anything at all, it’s worth quite a bit.”

So if it’s not a bubble, it’s a revaluation, that is, people taking their local currencies and choosing to buy bitcoins with them.  At first it will be greed driving people, Bitcoin is a complicated concept that took me personally two months to really wrap my brain around. 1000% gains that seem like they’ll go on forever are pretty simple incentives to understand.

It won’t take long for those new to Bitcoin to start using them on their merits, and then the bubble theory kind of falls apart.  But before we get to the point where people will want to spend their bitcoins, we have to figure out what a fair price is given the amount of interest.

Businesses relying exclusively on Bitcoin purchases will have a difficult time with people concerned about their purchase today winding up as the “10,000 Bitcoin Pizza” of tomorrow.

Once we hit a plateau and the price steadies for a few months we’ll see the new Bitcoin economy start to bloom.  But what’s the fair value?

The US Monetary supply by a conservative standard is about 10 trillion US dollars.  Let’s say 40% of the value held in dollars would instead be in bitcoins, that puts the price per coin at $190,476.18.

If bitcoin gets any kind of mass adoption there just aren’t enough coins to cover without prices going up exponentially from where they are now.  It’s how the currency is built, and it’s a very interesting open source design if you’d like to read the original white paper by its anonymous creator.

How would you even use a bitcoin if they became that valuable?  Luckily, this has been thought-out and there is a plan. As bitcoins become more valuable, people will use smaller amounts to perform normal transactions. At prices like those above you could buy a house in many parts of the world with a single coin!

Because of their extreme divisibility, rather than increase the maximum number of coins (21 million at most), any user can go to Settings -> Options -> Display in the standard Bitcoin wallet and change between BTC, mBTC (.0001) uBTC (.0000001)

So my wallet with 8.7BTC becomes 8,773 mBTC or 8,773,192 uBTC.  Put another way, if 1BTC is worth $100,000 each mBTC is worth $100, each uBTC worth $.01

This trick can be performed as needed to keep every-day transaction amounts from being preceded by three or more zeros.  It doesn’t affect the currency itself since every person can choose when to make the switch, it’s not permanent, and nothing really changes besides your perspective.

Let’s go back to the number we got when part of the US money supply when converted partially into Bitcoin – $190,476.18/BTC.  That’s a big number.  But is it realistic?  Let’s take a look at a small country like Cyprus, what would the price of Bitcoin be if they fled the euro at least partially for this new currency?

If, desperate to flee the banking sytem, Cyprus’s disillusioned citizens rebelled and put half of their remaining commerce (GDP 28 billion is the pre-crisis figure) into Bitcoin, that would add at least 5 Billion USD to the total market and send the per coin price above $1,000.   For reference, Cyprus is one of the smallest modern economies in the world.  Soon to be bailed out for a third time Greece claims GDP of nearly 300 billion, 10 times the size.

What would happen if Greece abandoned the euro and reissued the drachma backed by bitcoin reserves?  They would be both causing and benefiting from an explosion in value from current levels to over $14,000 per coin assuming supply stayed steady, which is no guarantee.

More importantly, the value of the drachma would rise along with the value of the bitcoins backing it.  The government bitcoin treasury would be publicly posted and easily audited by any interested parties, it could genuinely fix a number of their problems.

When adopted as a national currency, its citizens get to stop thinking about bitcoin prices as compared to anything else because both their pay and their costs float along with the value.  It doesn’t make any difference.   The only time currency conversion comes into play is when you’re dealing with someone whose currency is not backed by Bitcoin, then it needs to be converted on one side or the other.

Should you buy Bitcoin?  If my analysis is correct, then yes, you probably should.  My disclaimer is I’m not a financial adviser and if anything happens suddenly to Mt.Gox (the largest Bitcoin Exchange with about 76% of all trades and an account backlog of 10,000 or so people who want to trade their local currency for bitcoins) it could cause some trouble.  How much trouble is another matter.

Two weeks ago I wrote about pretty much the “worst possible event” that could happen to bitcoin, happening to bitcoin.  You can read all the details here, but basically for about 8 hours there were two versions of Bitcoins’ “who owns what” system, which disagreed with each other.

I expected a major hit to the price, but little came of it. By morning the mostly volunteer dev team had resolved the major issues in cooperation with the community.  When I interviewed the lead developer, he told me what they had learned and what they planned to change.   Shortly after that article was published they released a public postmortem.  When’s the last time you heard that from a leader after a currency crisis?

Maybe that’s what so different about Bitcoin – The “important” people are in the positions they are because they get the work done, and inspire the community as an ideal to be sought. They have genuinely good ideas that sound like they will, and often actually do work.

Because changes require a large proportion of total users, would-be leaders (whether “official” or not) who put forward solutions that make the problem worse simply do not retain their authority.   The masses come to understand that they are not to be trusted with important decisions, so they aren’t.

This dynamic lets the best individuals rise to the top, emerging over time through the quality and implementation of ideas rather than by election or appointment.  Quite a novel system.

Opportunity knocks, but few listen

All this value flowing into the once tiny market has already had an interesting effect: the creation of the first Bitcoin Millionaires and future billionaires.  When the currency was just getting started in 2009, coins were easy to mine and nearly worthless.  As I mentioned before the value of a currency is determined by its utility and just like every other new money, hardly anyone knew what it was, nobody accepted it.

Many tech enthusiasts have been kicking themselves over the past few months.  As the price soars their mistake has been emphasized.

In those early days hundreds of thousands of coins were mined but because of their low value, they were sometimes disregarded.   It is not an uncommon story to hear about tens of thousands being spent on a single low cost purchase or even forgotten on a reformatted computer.   Had those bitcoins just sat on a thumb drive, their owners would be able to retire at even these “low” valuations.

But that story does not describe everyone.  Others learned about the concept and jumped in without looking back.  Some bought in by investing in high powered computers capable of finding more bitcoins faster.  Many bought those first coins from those first miners on early markets at $.50 USD/coin or below.  In some cases far below.

To get a better idea of what things are like in the suddenly affluent Bitcoin community, I spent about 4 hours in the Bitcoin and BitcoinDev IRC chat rooms.  I spoke with 10 people, (none of whom wanted their names used) who ranged in their holdings from 50 to about 650 units.

This was the scenario given to them: we’re two years down the road, Bitcoin has revalued to about $100,000 USD per coin and stabilized for what looks like the foreseeable future. What do you do?

Adam: So your 77 bitcoins mean you’ve got $7.7 Million USD, how are you going to invest it?  Put it in stocks and bonds, what’s the plan?

S: I’m not cashing out

S: I plan on using bitcoins to invest in startups

A: Never?

S: Never.  The main objective is to use this to pay, just like I use fiat now.

S: I want to be able to invest in someone’s idea

S: Giving them BTC so they can build something.  Something cool.

A: How much of your wealth would you want to invest in Bitcoin related startups?

S: Probably 25% to 50% at least

Another user told me:

E: I am not planning on selling, I’m considering this a 10-20 year investment.

Adam: Assume that we’ve revalued to 100,000 per coin and the market has become stable, would you cash out at any point?

E: I would sell enough to live comfortably, but otherwise no.

A: Would you want to keep your bitcoins in a Bitcoin bank that pays interest? Buy stocks or bonds?

E: I’d fund a startup for sure.

You’ll notice a theme, it’s one I heard over and over again in my conversations. Unlike any other kind of investment I’m familiar with, the holders who I spoke to had no interest at all in exchanging their bitcoins for local currency at a point in the future when the value was very high.  Because “you can already spend bitcoin” they simply don’t see any point when the conversion has obvious tax implications and higher costs than not.  This was true of every single person I spoke to.

The tax implications for Bitcoin are controversial. Most jurisdictions treat it like any other commodity that is bought and sold for profit, but from my research it seems virtually impossible to discover how many coins a specific person holds without first having explicit knowledge about where every wallet is stored.

My original goal in speaking with the Development team was to find out how many people are holding more than 1,000BTC, and after getting the IRC equivalent of a blank stare, Dev GMaxwell corrected me:

GMaxwell: That’s deeply unknowable.

GM: An address having a lot of coin in it isn’t especially informative… there are many wallets with more than 1000 BTC without having 1000 BTC in any one address: sane bitcoin software spreads things out over multiple addresses.

Adam: Any Guess?

GM: There are only about 10,988,775 bitcoins [currently in existence], so the number of people with more than 1000 must be less than 10988.

GM: So, I can confidently say that [1,10988] are lower and upper bounds.

Maybe I’m wrong, but it seems like paying any tax on bitcoin transactions ranges from voluntary to unenforceable.

The other theme that quickly emerged was the reverent way in which Crowdfunding and startups are viewed by Bitcoin enthusiasts.  Maybe it’s a reflection of the type of people willing to jump into a new, untested currency conception.  Maybe it’s a population used to being without the resources to achieve their goals alone.  Whatever it is, it runs deep and we didn’t have to wait long to see it

On April 2nd, the day after breaking $100 for the first time – User MPort donated 200 bitcoins ($28,000 at the time) to Free Domain Radio, a donation supported online philosophy podcast.

“I am very happy to say I donated 20k today. dances through the room :) Via bitcoin ofcourse (sic). After I send it I started crying thinking about my foo. One of the first times. A great day it was. Thank you so much Stefan Molyneux and the whole Freedomainradio community for changing my life, learning me (sic) to listen to my feelings and what true love is. Your mission of changing the world by fighting parental abuse saves many young lives and is, although hard, I strongly believe the only way to get rid of violence, unhapiness (sic) and dysfunction, in personal life and in the world. Absolutely great also to see Michael M. DeMarco being part of the team now. May freedomainradio conquer the world! https://blockchain.info/address/1Fd8RuZqJNG4v56rPD1v6rgYptwnHeJRWs

I guess that’s what I’ve come to see – The people who invested in Bitcoin early really aren’t like conventional investors, they’re early adopters.  As an early adopter you’re used to paying more and working harder to get the same use out of your device.  Any first has extra costs, problems and unexpected consequences, but you do it because it’s something you’re passionate about, you’re on the cutting edge despite the costs.

That’s the demographic poised to become affluent following mass adoption.  I’m sure some of them will buy expensive cars and large estates, but those really weren’t the ambitions of the people I spoke to.

One young father who had 200 bitcoins (20 million in the scenario) sounded a little misty when he told me about his families ambitions to buy a boat and join the Seasteading movement.  Minimizing his footprint to maximize the enjoyment he received from life and his family.  He said he would be investing at least 75% of his new found wealth into helping people fulfill their dreams by funding startups.

Another told me that when he first sold some of his bitcoins (at $96) he had a very different relationship with the money than bitcoins.

“It seemed like funny money, you know?  The stack of hundreds in my hands made me very uncomfortable, I didn’t like it.”

I could go on, and I only spoke to 10 people over four hours.

We live in strange times.  Mostly that strangeness manifests in depressing headlines we read daily about crisis without end, solutions without function.  Bitcoin is an anomaly.

Though it has many detractors, few of them are even familiar with the base logic of the system, much less its inner workings.  With their limited understanding of the complicated topic, they put themselves in front of the world spreading confusion and mistrust.

Bitcoins advocates are wildly passionate and understand the protocol top to bottom, happy to drift off into tens of minutes of jargon about cryptographically signed messages should that be required.  For most though, it’s not about the protocol; that’s just a means to their end. Riding the same wave as Kickstarter.com, it is not bitcoin itself, but the projects it enables that make it so compelling.

The renaissance of the medieval period is commonly thought of as an artistic and architectural movement, but in fact wealthy patrons supported all manner of scholars, creators and scientists too.  Profit motive was not the goal, but occasionally the result, and great works were achieved which remain unsurpassed to this day.

I think that’s what we’re looking at here: a conflux of wildly improbable things that gives the world better money, while putting a staggering amount of value in the hands of fervent early adopters and crowdfunders.

With a Bitcoins Accepted Here widget, now any page on the web can be its own Kickstarter, with no fees compared to their 8%.  Should you decide to accept bitcoins, you’ll know that one day soon a Bitcoin Millionaire might like your passion project and help make your dream a reality.

It’s just crazy enough to work.

Enjoy the read? Adam B. Levine accepts tips!19hUtqeVxpphdwzfZzCuq4Pg2piqD7fF5f
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Adam writes about new technology at Mind to Matter and curates The Daily Bitcoin, You can contact Adam here.

Edited by End the Lie

Did I forget anything or miss any errors? Would you like to make me aware of a story or subject to cover? Or perhaps you want to bring your writing to a wider audience? Feel free to contact me at [email protected] with your concerns, tips, questions, original writings, insults or just about anything that may strike your fancy.

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20 Responses to The new renaissance: how Bitcoin millionaires will change the world

  1. Adam B. Levine April 5, 2013 at 8:01 PM

    Wanted to note that in the last two hours I’ve recieved 5 tips totaling .15 or so Bitcoins from readers of this article, which is about $20 worth.

    Imagine what how much a good article would give the writer when everybody is surfing the internet with a bitcoin wallet.

    Reply
  2. dc April 5, 2013 at 10:27 PM

    seriously the most biased article i have read on btc. so many points are glossed over and legitimate concerns such as no intrinsic value and the myriad of risks associated with bitcoin arent really discussed. i support it in principle but tell me again why i would use a one world digital unbacked currency when the elites goal is for a one world digital unbacked currency… Is it not likely that this close to a complete fiat crash that they want everyone out of real money -silver and gold- and into an unbacked digital and illusory currency? There is a huge difference in money as a store of value and a day to day currency. IF ITS COMING DOWN I WANT A STORE OF WEALTH AND NOT A SPECULATIVE, VOLATILE MEDIUM OF EXCHANGE.

    Reply
    • Adam B. Levine April 5, 2013 at 10:55 PM

      Hi DC,
      Because “the elites” wouldn’t want Bitcoin, it’s a currency they can’t control through controlling the clearing house system.

      I’m aware I didn’t fully cover all the intricacies of Bitcoin, but I was a bit concerned when I hit 4300 words about the article being too long for people to consume. I felt like I covered all the important points, what specifically did you feel I left out?

      I really like gold and silver and I invest in those too, but when I’ve tried to spend my gold in the past, like to buy a whole beef (about $2,000) I’ve had three ranchers decline or back out at the last minute on using gold “I just don’t know enough about it”. I bought a set of carving knives from pinewoodforge.com and spent literally a month emailing back and forth with them explaining why they would want to give me $300 worth of knives for a little $300 gold coin. But it was nerve-wracking when I sent that little coin in a registered envelope through the mail, I didn’t know if it had arrived or if someone had stolen the suprisingly heavy envelope for a week, and if someone had stolen it I would have been screwed, not like I could ask them to give me the knives anyways.

      Do you not agree that the derivatives market for gold suppresses the price, and that happens because gold is a pain to store and trade for reasons I described?

      I think you’re mistaken in thinking Bitcoins aren’t backed by anything – They are, the work done in processing transactions and scheduled currency issuance (mining) provides a cost-basis, you can look up miner profitability if you’d like, right now it’s quite good because of the price spike but Bitcoin has a self-adjusting mechanism that means no matter how many miners there are, the rate of issuance remains about 25 coins per 10 minute period.

      But that’s not really relevant, Bitcoins represent the value that is put into it – just like any currency. Size is legitimacy, and in the case of bitcoin the fundamentals even back it up.

      I totally agree with your concerns about the volatility of Bitcoin right now, the price is crazy but that’s because the market doesn’t know how to value it yet – What we’re watching is a market functionally without manipulation. That’s not to say there aren’t attempts to manipulate, but since there is a finite amount (unlike dollars or euros), it’s manipulation only works for long if you don’t care about losses.

      It might take a year or even two to shake all the volatility out of bitcoin, for a long time it’ll just be a slow steady upward movement caused by more demand than the 25 coins per every 10 minutes issuance rate can keep up with, but the crashes (they’re still in our future, don’t worry) will stop. When the market is calm, commerce will happen. More people will be getting paid in Bitcoin (international contractors first and foremost)

      It’ll just be normal, like twitter or your tablet is now.

      I’m not sure what you mean by “if it’s coming down”, but bitcoin *is* reliant on the internet, so if that comes down it’s game over until it’s back up again. I don’t think that will happen, but I’ve been wrong about things before.

      Reply
  3. Anonymous April 6, 2013 at 12:53 AM

    I prefer real tangible goods. This is more imaginary currency. No thanks I won’t fall for it!

    Btw the Internet will come down or at least be highly controlled. Bet on it

    Reply
    • Zorander22 April 6, 2013 at 6:38 AM

      Look a little more into fiat currency. In addition to the whole idea being “imaginary” (we’re not backed by the gold standard anymore), the vast majority of money now already exists digitally, as opposed to the tangible bills and coins we use. Like it or not, unless all your money is stuffed in your mattress, you’re already using imaginary money.

      Reply
    • Adam B. Levine April 6, 2013 at 7:48 AM

      In many situations I also prefer real tangible goods. I’m assuming you’re talking about supplies, precious metals, things which have value no matter what happens, in all situations.

      But I also don’t think any of those tangible things are good for transactions on the internet or over longer than you want to drive distances.

      Holding something your hand has costs, it means it weighs something, it means it occupies space, it means material was used to create it or extracted from a natural place. For the purposes of money, these are not great attributes.

      Money being good money is a virtue all alone, I understand it’s hard to conceptualize and a little counter intuitive, but once it clicks you’ll see everything through a new lens.

      Nobody is trying to trick you, you can believe what you want and if you change your mind at a later point you can still get involved however you choose. It’s a very freeform thing, understanding.

      Reply
  4. pseudonymous April 6, 2013 at 2:40 AM

    The internet your using right now is not tangible. Do you think it is also imaginary?

    Reply
  5. Spacehoppa April 6, 2013 at 2:59 AM

    Great article that describes the aspirational side of bitcoin, which is the side I like best – the ability to create a new economy based on good ideas and genuine ability, rather than skimming money off the system through deceit and arbitrage as is the case now. I love the distributed and truly democratised nature of bitcoin. You only need trade in and accept bitcoin if you like it as a currency – no other reason. As you say, those with the ability to solve bitcoin’s problems will naturally rise to the top, a meritocracy at last! Please write more like this. This kind of article emphasises the long term reasons to get into bitcoin, once the boom time (revaluation) is over. With the help of articles like yours we can get the word out that this is more than just a commodity, it is a paradigm shift, a really great one!

    Reply
    • Adam B. Levine April 6, 2013 at 7:21 AM

      Thank you! Please share it with anyone you think might be interested in the topic.

      Lots of people are just hearing about Bitcoin for the first or second time, I think the issues I’m speaking to are a good way to help people see what bitcoin can do for them personally.

      I look forward to the post-boom time quite a bit.

      Reply
  6. Harryman11 April 6, 2013 at 3:23 AM

    Just wanted to say thanks for the great talk. As a would be bitcoin millionaire in your scenario I thought I would comment.

    I was just talking with my brother the other day and brought up the fact that everyone that already has enough bitcoin to become millionaires will change the world because if they were smart enough to figure out bitcoin and see its future value and utility probably have a few good idea’s of their own or at least think in a way where they will be able to see value in ideas. It will be a really exciting to see what crazy technology we will see once bitcoin millionaires start spending there money.

    As for me I’ve had a note book accumulating ideas for electronics, apps, web services, and even fast food. One of them I’m confident will be revolutionary. The only thing I lack is the time still working a job and capital for some of the R&D. So instead of funding other peoples startups I will be using it to fund my own startups.

    Reply
    • littlegenius April 13, 2013 at 6:40 AM

      @Harryman11 I started an industrial business that has grown to a substantial size and I have accumulated enough bitcoin personally as well. I realized after reading this excellent article that I can accept bitcoin from my customers in China more easily than wires. Now I just have to get them to pay in BTC. We will see how long that takes!

      Reply
      • littlegenius April 13, 2013 at 6:42 AM

        Oh, and keeping some of the receipts in BTC might fund investments in plant and equipment if BTC rises. That would annihilate our competitors.

        Reply
  7. partyp April 7, 2013 at 9:51 PM

    Thank you for the great write up and audio! Just listened and followed along to the whole thing. Sent you a tip for the great work!

    Reply
  8. Anonymous April 8, 2013 at 11:24 AM

    hey Adam good article. how much have you made in tips from this article so far? I think the fact that you got ANYTHING is a good proof of how supportive the bitcoin community is and how well it works.

    I would like to know how many donations he gets from his articles. I’m goign to guess its very very low.

    Reply
    • Adam B. Levine April 8, 2013 at 1:01 PM

      Anonymous:
      I’ve recieved 0.5465077 BTC from 13 separate tippers. The largest tip was 0.2, the smallest tip was 0.0071377 and they’ve been coming in pretty steadily.

      At current prices (183/ea) I’ve earned about $103.29 for this article since friday evening (it’s monday morning now, for posterity)

      The return from this article was very very good by any comparable standard.

      I ran another story with a tip jar, not related to bitcoin, on my blog mindtomatter.org and within about 5 hours recieved .01btc. Might not sound like a lot, but it was a post that took 15 minutes and was basically me rambling about context, no bitcoin relevance at all, and at current rates somebody paid me two bucks for their enjoyment of it. That is very exciting to me.

      Right now I’m working with several people on developing a better tip widget that fixes some of the annoyances, and adds extra features that would be very useful to content creators. I’ve gotten a VERY positive response to this topic and think it’s really going to go somewhere.

      Thanks for your comment, I’ve been meaning to update the total. You can see the active balance with all transactions on https://blockchain.info/address/19hUtqeVxpphdwzfZzCuq4Pg2piqD7fF5f

      Reply
  9. littlegenius April 13, 2013 at 6:58 AM

    I enjoyed the multiple perspectives. Tip sent kind sir!

    Reply
  10. Bastiaan Schuiling May 4, 2013 at 8:21 PM

    I very much enjoyed the article, donated 0.01btc. Not much, but the first donation I ever gave, and man, is it easy! Not the usual hassle with paypal – they aren’t very good at small transactions anyway – just copy/pasted the address, enter amount, send.

    I’ve been waiting for a proper online payment method for years, but I didn’t see it coming in the form of bitcoins! Exciting times, hmm :)

    Reply
  11. Samuel May 22, 2013 at 5:05 PM

    It’s Bitpay that allows merchants to accept payments, not Bitinstant

    Reply
  12. Rob June 12, 2013 at 12:05 PM

    Truly an inspiring and informative article. It’s good to see the passion behind Bitcoin. In a time when we’re all being offered free cloud back up from the NSA, it’s good to know that the Bitcoin ecosystem is not what the media paints it – it’s not a darknet currency. Rather, it’s a global cash system that transcends boundaries, while protecting privacy at the same time.

    Reply

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