A lot of people talk about bitcoin as a new
kind of currency, but ignore that talk. Bitcoin is a crappy currency. Dollars are a good currency.
The real revolution of bitcoin is as a new kind of payment network, something like Visa
or PayPal. Those conventional payment systems are owned and operated by for-profit companies.
But bitcoin isnt — there’s no Bitcoin-the-company. Instead, bitcoin is run as a peer-to-peer
network. Computers on the bitcoin network process bitcoin transactions by adding them
to a shared public register. They call that the block chain. All the computers keep it
together. It’s as if we were all keeping Visa’s records up to date together as some kind of
weird volunteer project. You’re probably wondering, well what’s the point? Why not just pay for
things with PayPal or Mastercard like a normal person. And it’s a good question. But bitcoin
has one big advantage over conventional payment networks. It’s an open platform. To become
a Mastercard merchant, you have to apply for permission, pay a lot of fees to Mastercard,
comply with hundreds of pages of regulations. Bitcoin is different. Anyone can use it. It’s
free. And there are no rules limiting what bitcoin-based services can do. An open technology
platform like this can become a hotbed of innovation. Think about the internet. People
were as baffled by the internet in the 1980s as they are about bitcoin today. The internet
was unusable then. It seemed ridiculous that anybody would ever find anything useful to
do on it. Eventually, that freedom allowed people to build things like Amazon and Google
and Facebook. The buzzword here is “permissionless innovation.” You can do cool things without
any central authority being able to tell you no. In the same way, bitcoin can become a
platform for building a new generation of financial services, like international money
transfers that are faster and cheaper than Western Union, better security for everyday
purchases, and perhaps new services that aren’t even possible with conventional payment networks.
We don’t know what this stuff will be. But now that bitcoin is here, we’re going to find