“Bitcoin is Poised to Change Society Much More Than the Internet Did”

#Future

Thu, Apr 4th, 2013 20:00 by capnasty NEWS

According to Rick Falkvinge, founder of the first Pirate Party, although Bitcoin is still "far from ready for prime time," the electronic currency's ability to eradicate a government's ability to operate means that "it will change society’s fundamental operations much more than the Internet did."

What Bitcoin does is cut the banks out of the loop, and by extension, the government’s ability to operate./

Those wars you have seen on TV? They are all fueled by this mechanism — the ability for banks to keep people happy in letting them spend imaginary money, while simultaneously giving the nation-state the ability to control as much of the money flow as it likes (and siphon as much as it likes off for itself).

Now, Bitcoin isn’t going to drive its adoption just because it is impervious to state control and insight. Rather, its adoption is going to be driven by the strong business case for corporations to cut banks out of the loop — more specifically, cut bank profits out of their own profits.

Not everyone agrees, however; Reuters' Finance blogger Felix Salmon thinks that while Bitcoin blowing past $1 billion for the first time, it is also an indication that we're "in the middle of a bitcoin bubble right now, and it's only a matter of time before the bubble bursts."

If you hold dollars, you’re trusting the US government not to destroy your wealth. Bitcoin, by contrast, is based on mistrust ? it’s specifically designed so that it’s every man for himself. All in Vain was blamed by many in the bitcoin community for his stupidity: what was he thinking, keeping his wallet on a Windows computer attached to the open internet?

But even with bitcoin, people nearly always end up trusting someone — and the entity they’re trusting often turns out to be unreliable. MyBitcoin, turned out to be a fraud; Mt Gox was hacked. The latest hot new bitcoin company is Coinlab, but given how much money can be made by hacking into these companies, and given that law enforcement authorities are unlikely to make any attempt to go after the perpetrators, there will always be a pretty substantial risk that clients will lose their money.

The level of mistrust built into bitcoin is both feature and bug — most of us actually like being able to outsource our wealth-hoarding to some large trusted institution, rather than burying $1,000 under a black volcanic rock in a dry stone wall next to an old oak tree, or wrapping $90,000 in hundred-dollar bills in aluminum foil and hiding it in the freezer. Looking after your own coins is dangerous, and requires a pretty substantial level of tech-savviness. But trusting someone else to look after your coins requires the very trust that bitcoin was designed to circumvent.

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