The Theatricality and Deception of Bitcoin
It’s been a while since everyone in my Twitter feed has been talking about something that seemed to have come out of nowhere: Bitcoin. Maybe the last time was when SnapChat exploded in the fall of 2012. Of course, Bitcoin has been around for a few years, but for a variety of reasons — the run on the Cypriot banks, general fear about the global economy and specifically the Euro Zone, and politically-based currency manipulations based on reserves — Bitcoin has raised in prominence in the tech world, become the subject of articles in everything from BusinessWeek to the MIT Tech Review to all the daily tech blogs.
Yesterday, I spent 90 minutes reading seven (7) different articles and primers on Bitcoin. There was so much chatter about it, yet if pressed, I couldn’t explain what it was beyond “internet currency.” After reading this pieces, I feel I have a good grasp on what Bitcoins are, but all of the articles I read explained “what” Bitcoins are and “why” they’ve risen in popularity, but none of them offered a glimpse into a future world where Bitcoins were mainstream. That led me to wonder, “Why?” I’ll explain my answer to that question below, but briefly, here’s what I learned about Bitcoins:
- Bitcoins are a form of web-based currency created by a developer, working under the name “Nakamoto,” who meticulously calibrated the economy around the coins with a finite set of units and around a distributed, peer-to-peer mathematical model of how a Bitcoin captures and retains value.
- In the past few weeks, the market price for a Bitcoin has increased a lot.
- There is a startup accelerator that is devoting its summer class to startups focused around Bitcoins, such as YC-backed Coinbase.
- Tech crowds may be unduly enamored by Bitcoin because it feeds a deeply libertarian utopia where currency is not backed by hard assets (such as gold) or political guarantees or regulatory environments (such as governments), but rather dispassionate algorithms which control both supply and demand.
This much, we all know now. The rise of Bitcoin is fun, fascinating, foreign, and depending on your point of view, scary, a joke, or a real fundamental shift in currency. The truth is, in this case, no one really knows. I’ve thought about writing about this for a few days, but held back because I didn’t think I could add anything that wouldn’t be redundant. Above, I’ve only summarized what I’ve read.
It’s hard for me to imagine a future with Bitcoins, not because I don’t think it’s possible, but because I simply can’t see it in my mind. What I did think about, instead, were some of the initial scenes in “Batman Begins” when Bruce Wayne met Mile Ducard and was educated about the ways of the League of Shadows: “Theatricality and deception are powerful weapons.” Even though people have written about potential regulations (from government, of course), my conclusion in reading those seven posts is that there is a theatricality and deception about Bitcoin that give it incredible potency, something that the crowd intuitively understands could be a shift in how value is stored and shared, but also one where the crowd doesn’t fully understand just how this could all fold — or how disruptive it could be. And, the fact that Bitcoin is faceless, dispassionate, and regulated by networks and models — not governments or hard assets — is so foreign to all of us, that it just may outlast all of the analysis we could conjure up. It could outlive us all and, in doing so, be immortal.