Every once in a while a new idea comes along that simply stops me in my tracks and makes me think. I enjoy these moment because they are few, far between and almost always leave me enriched in some way – simply by gaining knowledge of a new concept or idea, having a misconception corrected or, in the rarest of examples, having a total philosophical epiphany. I can’t say that the BitCoin Project qualifies as an epiphany, but it comes close.
Currency handling professionals inherently understand the effects on our industry caused by recent events in the banking world. One of the more significant implications for us is that there is more currency in circulation than ever before, which places ever increasing demands on the supply chain infrastructure to ensure timely and consistent movement, thereby assuring availability. We all feel that the demise of cash money will not happen in our lifetimes. I wholeheartedly agree with that sentiment.
It is inevitable, I believe, that cash money will one day cease to exist – the paradigms of convenience technologies and Moore’s Law combine to one day allow none physical currencies to be used by every human, whether they possess a physical management mechanism (a debit or credit card, or cell phone for example), or not. Whenever that day comes, what will the currency be like?
Enter the BitCoin Project. BitCoin is a peer-to-peer (computationally speaking) digital currency. It is created by the user, in a controlled and secure fashion. It is given value only by the user and is backed by the asking price (perceived value) of the item for which it is used to purchase. One could argue that this type of valuation is less arbitrary than gold or silver. BitCoins are contrary to the nature of modern currency as a method to influence a nations financial stature through the actions of it’s central bank or monetary authority. BitCoin is also a scary concept for the open stock markets of the world since the hedge provided by forex arbitrage is eliminated.
The bottom line is that today, you and I can download the BitCoin software and by committing unused CPU power to solve meaningless but time consuming equations you can create your own BitCoins. Arguably they have no value to you until someone decides to accept them for payment. Apparently the time of acceptance and therefore the assignment of value is almost here. From inception (we think somewhere in late 2009 or early 2010) the BitCoin Project has created over 3,000,000 bc. Arbitrarily (as far as I can tell) there will be 21,000,000 bc created. BitCoin is accepted at various websites spanning the following categories (full description):
- Internet services
- Virtual goods
- Tangible goods
- Technical support
- Professional Services
- Non-profit Sports and Activities
- Shopping rebates
- Donation-accepting organizations and projects
If you believe that hackers and computer “geeks” may one day rule the world, you could be right. At the very least I think that this group of savvy entrepreneurs and talented open-source coders could very well be inventing the currency of tomorrow.