Bitcoin Lecture Panel, Glasgow University, 30 January 2014

Lecturer: Michael Parsons (chartered accountant, banker)

Bitcoin is decentralised digital (non-fiat) currency. It is driven by a reaction to three separate developments: centralised monetary authority; diminishing financial privacy; dominant legacy infrastructure. Dominant fiat currencies traded in the bitcoin marketplace are USD and CNY. Mining difficulty has exploded in the past year, along with the bitcoin exchange rate. Bitcoin is electronically equivalent to cash or gold and can be stolen (via hacking).

Lowdown on software, payment processing options, and regulatory issues (especially regarding bitcoin exchanges).

Bitcoin is a currency, commodity, store of value and payment network – a non-political unit of account. While it may present competition to fiat currencies, it does not automatically replace them and could easily be used in tandem with them, as today. Why should the State have/enforce a monopoly on money? Fiat is debt printed out of thin air, with no limits.

UK context – The Bitcoin ecosystem would benefit from a UK regulated exchange “anchor” to provide world-class security and develop mainstream usability and acceptance. And, better to have Bitcoin exchange transfers on the inside rather than (unregulated) outside. (eBay will allow classified bitcoin sales Q1/2014.)

Lecturer: Garrick Hileman (Adam Smith Society – University of Glasgow)

Bitcoin should not be dismissed as a passing fad. But there are real risks and reasons to consider as to why Bitcoin might not take over the world. Bitcoin investors obviously have vested interests in promoting the currency's use; are bullish.

Price increase makes bitcoin look like the biggest bubble ever; cryptocurrency is the most bullish commodity market ever. And who is Satoshi Nakamoto anyway?

Brings up Wörgl's Freigeld (non-fiat démurrage currency of the 1930s), and its “death by regulation”, whereby the Austrian Central Bank succeeded in getting it shut down in 1933. Non-fiat currencies can die three ways: “death by regulation” (the least common!), death by technology (e.g. merchant tokens became obsolete; can altcoins supersede bitcoin?) and death by insufficient demand (e.g. LETS, a UK-based barter system, though that has not completely died out).

The success of dogecoin highlights how people are seeking to form an emotional connection to currency and money. Dogecoin began as a joke but jumped more than 300% in price, and has an active development community.

Another hurdle for Bitcoin is that convenience trumps anonymity/pseudo-anonymity for most consumers. It seems that few women use Bitcoin at the moment.

The ability to speed up global remittances and reduce fees is a huge plus for Bitcoin.

Bitcoin is malleable – programmable money can be reprogrammed.

Lecturer: Javier Martí (bitcoinglobalinvestments.com)

We are at the end of an economic phase, Martí refers to this as “predatory capitalism” (really corporatism). Corruption and debt crises abound; banks are insolvent. Printed money = rising inflation, shows through in costs of basic staples. Economies are collapsing. Low-quality media not informing the public.

High unemployment (for multiple reasons, technological and otherwise) is the big deal.

Bailouts transfer wealth from the working/middle classes (“the 99%”) to the rich. Much of the privileged class is over fifty years old and “technologically illiterate”.

Banking system today is very weak and no economy is immune to possible crisis.

The main strength of bitcoin as a currency/money is its limited supply - ฿21 million cap. Paul Krugman knows “nothing” about bitcoin. Bitcoin, as programmable money, has tremendous versatile utility: dozens of possibilities.

Bitcoin can be stored in one's head and is “perfect” for growing the shadow economy (aka black market, free market, underground market, System D).

Capital could flow into bitcoin from PMs?

Government threats? Propaganda “Bitcoin is evil” and associated marketing campaigns; could be banned (will that be effective or not?) with potential confiscation (probably not effective or enforceable?). A government that is broke, however, will struggle to fund enforcement of such bans or anything else.

The Bitcoin network can theoretically be “51% attacked”, likewise any blockchain-based cryptocurrency. A competing crypto or black-swan event could theoretically kill Bitcoin.

The Bitcoin network requires the Internet to function, but should the Internet or the power grid fail, we face bigger problems than merely Bitcoin's functionality.

Because Bitcoin is open source, it really does not matter who Satoshi is.

Bitcointalk and Reddit could be conceived as “information points of failure”, centralised sources of information. There are also potential technical barriers to entry for new Bitcoin users.

Price is more or less irrelevant: Bitcoin is either a good idea, or it isn't. The black market reduces the risk of bitcoin price falling to zero.

Half'll do

Today, the miners' block reward has just halved from ฿50 to ฿25. Happy Halving Day! May the quasi-deflationary force be with you.

Even the BBC news has linked to a report on this! Is Bitcoin going big from here?

They are the 99 per cent

So where is the Bitcoin tipping point? What exactly constitutes a genuine front-line development of the cryptocoin? Maybe, if around one per cent of the population, or even one per cent of computer users, regularly adopts Bitcoin for use as money, a major Rubicon will already have been crossed, in spite of the mainline economy still being dominated by fiat and big banks.

Recently, I was interested in a social attendance of a "murder-mystery" weekend, where a friend, let's call her S, bought a multi-party-discount ticket and thus I owed her some money if I wanted to come along. Due in part to time constraints, I offered her a bitcoin payment for its benefits, in particular its immediacy, while stating simultaneously that cash would be fine, subject to a time delay, for we would have to arrange to meet up for the payment. (While I sometimes use PayPal for purchases, I do not have a live registered account with them, primarily because of their asinine rules.) This all culminated in S being practically offended even at the notion of Bitcoin, in spite of me protesting that it's the government and central banks who can coerce us to use fiat and I have no power to coerce her into accepting BTC.

Since you're reading this, there's a fair chance you have some kind of interest in Bitcoin. But for every one of you, how many like S are there? I've been pondering this for a while and drawn a tentative conclusion that it does not matter that much. There are bound to be dozens like S for every Bitcoin user/enthusiast, aren't there? On the other hand, if even about one per cent of computer users get seriously into Bitcoin, the market cap will be more than sufficient to sustain a viable Bitcoin economy, maybe even in the event that governments or other exterior forces stifle cryptocoin-fiat exchange.

Alternative cryptocurrencies such as Litecoin (LTC) may yet prove to play a greater rôle in this economy than perhaps might currently be envisaged.

If you meet people like S above, do not despair - they'll always be there. And hopefully it matters not.

The immediate aftermath

Now the Bitcoin London conference 2012 is over, there is lots and lots to ponder over, and I don't just mean future prospects related to speculating on and mining bitcoins, though those are major topics in and of themselves. Life in London (or “the Grad” or “the Burg” as I sometimes like to call it) goes on seemingly as normal, merchants in town dealing in the same old fiat bankster paper as before, probably, a few financiers, investors, gamblers, geeks and anarchists aside, blissfully unaware of the conference and possibly even Bitcoin itself. That is the first and most obvious problem: general awareness, or lack thereof. Bitcoin needs to be promoted and publicized a lot more, not to mention become more widely understood, to go mainstream and boost the BTC economy. There have already been occasional mainstream-media articles about Bitcoin published in the last year or two, but they alone did not really trigger much interest from me, at least not at the time. I just thought it was a silly little “geek thing”, which it pretty much was and maybe still is at the moment, if we're really brutally honest amongst ourselves.

The overall content of many of the conference's lectures was not exactly hard-core geekology, though a bit of it surely was, but neither are we looking at “Bitcoin for Dummies”. Now now, there's an idea for a book! Does it even exist yet? There are oodles of possible ways to draw more public interest in Bitcoin, but they will most likely have to involve the utmost user-friendliness and one-click simplicity. Technology possibly requiring an IQ above 120 to use effectively is never going to gain massive traction. Talking publicly about fiat currencies, sound money, austrolibertarianism, Ron Paul and so on and so forth is not the answer either: that might be gibberish to some, but worse than that, is even a kind of politicization that we really don't need right now. The YouTube video Screw Banks! Use bitcoins instead is much closer to the mark, in my opinion.

I have noticed a few social BTC donations arriving, and I suspect at least some of them are associated with this blog. Thank you very much for your support! Whatever I managed to achieve within the Bitcoin community and beyond, I can't do without the help of geeks like you, some of whom are undoubtedly even smarter and more geeky than I, so it's great to have you on board in any capacity!