This month I decided to add Bitcoin to the forms of payment I accept for the consulting and career coaching services I offer music artists and others in this business. I also recently made my first purchase of the digital currency–1.06847855 of it, to be precise–at the sole Bitcoin ATM, located in downtown Vancouver. The procedure was quite easy, actually, and I was able to instantly deposit it into my already-created digital wallet.
If you have no clue what I’m talking about, you’re not alone. Here’s a quick and dirty primer of sorts on Bitcoin.
Wikipedia describes Bitcoin as a peer-to-peer digital currency that functions without the intermediation of a central authority. It is, indeed, the world’s first completely decentralized digital currency. It’s relatively new on the scene, having been created in 2009, but is now seeing a surge in usage (and value) around the world. It is used as a medium of exchange for the payment of goods and services, can be traded for many other currencies, and, like a precious metal, is a finite resource (i.e., it has been set up so that at a certain point no more bitcoins can be produced) that can be “mined” (exactly how that’s done is a bit beyond my grasp as of yet and outside the scope of this blog).
Currently, use by speculators far exceeds that of merchants and others in the marketplace; but that is changing as more and more vendors accept Bitcoin, in part because transaction fees are substantially lower than what services like PayPal and the credit card companies charge. I also like to think some are adopting it out of some kind of moral indignation, springing perhaps from libertarian or counter-culture roots.
Whatever the case, many are referring to the arrival of a functional digital currency as a financial revolution. In actuality, though, it’s neither conventional nor revolutionary. In one very real sense it heralds a return to very ancient times when money first appeared as a means to more easily facilitate peer-to-peer trade. Then, as now with Bitcoin, money served as a more efficient alternative to barter, taking the form of things that were the most useful, convenient and reliable, with no intermediary involved. In a sense, then, we’re going full-circle with the employment of bitcoin in this digital age, the difference today being that this new currency is also an alternative to other forms of money controlled by governments in collaboration with the banks.
And therein lies the rub. There wasn’t any intervening authority in the earliest days of money determining what it would be or setting laws and regulations as to its use, no central body deciding how much would be allowed to circulate, and no cabal of power brokers behind the scenes rigging the system for their own gain. As Bitcoin continues to make inroads, it threatens to shake the very foundation upon which our financial system is built. That, I think, will be a good thing. How others who fear a change in the status quo will respond is another matter.
Fasten your seat belt. These are interesting times.