Ah, bitcoin. Much maligned. Much disparaged. Hated. Mocked. Scorned.
Warren Buffet said it’s “rat poison squared.” Some say it’s stupid internet money. Others say it’s a scam. I personally thought the whole thing was silly when I first head about it. A digital currency worth thousands of dollars despite having no use?
Except, not, as I realized after learning more about it.
Bitcoin’s value is its network. With the bitcoin network, you can send money to anyone, anywhere, anytime, for any purpose, in massive or tiny amounts with certainty that your payment will always go through, you will never need to bribe anybody to send your money, your money will never be counterfeited or faked, your money will never get lost in transit, and you do not need to share any personal information. There is no other way to send money that accomplishes all those things.
Why do those features make bitcoin valuable?
Because you can now process your own payments. When you start a business, you don’t need to pay Visa or PayPal 2–3 percent plus $.09 per transaction. When you need to send somebody money immediately, you don’t need to pay $15 or 15 percent to a bank or money exchange. When your friends send you money, you don’t have to keep that money on your app or wait 1 to 3 days for the withdrawal to show up in your bank account. When you travel abroad, you don’t need to pay a 5 or 10 percent spread for a currency swap. When you do business with somebody who doesn’t take credit cards, you can pay them immediately with certainty the transaction will settle exactly as you expect.
You will never need to give your personal information to anybody nor risk a hack or data breach that puts your financial information in the hands of criminals. As long as you take some simple, common-sense precautions, you will never have to worry about anybody stealing your bitcoin. You never have to worry about your government confiscating your bitcoin or having to pay off a government official to use your bitcoin. You can use your bitcoin anywhere and anytime. Even if you lose your bitcoin wallet, you can never lose your bitcoin.
Do these things matter for most people?
We shall see.
Maybe the problem with bitcoin isn’t value, but utility. Usefulness. Bitcoin’s price changes all the time and the network has no customer service department. It takes a little time to learn how to use it and you have to trust the network to process payment (with conventional electronic payment services, a company immediately assures you that you’ll have your money in 1 to 3 days).
Fortunately, there are many, many smart, talented, motivated people working on ways to make bitcoin convenient and shield average people from changes in bitcoin’s price. The question is, can they make bitcoin useful without destroying the things that make it valuable?