With bitcoin’s price exploding, you may think it’s about to go mainstream.
Finally, the blockchain will have its day and everybody will realize the amazing power of open, permissionless financial networks and censorship-resistant money systems. Fiat oppression will end. Prosperity will return. Let freedom ring!
That sounds nice, but it also misses the point.
It’s not about the money
Everybody thinks bitcoin is about money.
In one sense, it is. In another sense, it’s about something much deeper: trust.
From electricity providers to traffic signal engineers, architects to researchers, banks to brothels, and every other human endeavor, we have to trust somebody to make sure we get what we’re expecting.
We plan our careers, vacations, retirements, meals—our lives—based on others doing what they say they will do.
Ideally, these people would be competent, honest, fair, and trustworthy. They would work for free and honor their commitments. Some do.
Usually, they make mistakes, charge fees, lie to you, steal from you, or argue with you. Sometimes, they share your sensitive personal information. They’re “in it for themselves.”
To keep these people from ruining society, humans found ways to make them do what they said they would do. For example, governments, settlement companies, clearinghouses, laws, courts, accountants, signatures, and oaths.
All these solutions have risks, costs, complexities, and the chance of human error. All can be corrupted. None can be scaled. It’s hard and expensive to create any uniformity or standardization.
With bitcoin, you can trust you will get the result you expect without a central authority. Tokens ensure everybody follows the same rules while the blockchain guarantees your actions will get the result you intend.
People lie, math does not. Computers will always do what you tell them to do.
As a result, you no longer need to rely on government decrees, local regulations, or the good faith of strangers. You can safely transact with millions of people who you have never met, with whom you have no relationship, who live in a country with different laws and regulations.
Bitcoin doesn’t just revolutionize money. It revolutionizes trust.
If you trust bitcoin, you don’t need to trust people.
Ok . . . so what?
It will take decades for this idea to sink in and I don’t know how it will play out. We’re still at the “it’s like Venmo, right?” stage.
How do you wrap your head around an idea that nobody’s ever tried before? What can you do with a technology that doesn’t fit your “normal” life?
Can you conceive of a world where one global payment network handles all sorts of routine, day-to-day tasks like paying your parking meter and tracking your packages?
I can’t. It’s a big thing to ask of people.
Not the first time
This is not the first time a new technology went beyond human comprehension.
Electricity had the same problem when it was first harnessed into a functional power generator. From The New Yorker:
In 1989, the Stanford economist Paul David wanted to understand why so many companies were so slow to adopt computer technology; for historical perspective, he turned to the history of the electric dynamo, which . . . transformed industrial production [but] had also been adopted slowly. In his paper, David explained that, at the turn of the [20th] century, most factories were powered by massive central steam engines. The engines turned overhead shafts, which were connected by an intricate array of belts and pulleys to close-packed machinery. When electric motors were first introduced, factory owners tried to integrate them into their existing setups; often, they’d simply replace the hulking steam engine with a giant electric dynamo . . . [but this introduced complexities, for example,] it was hard to keep all the electrical components working; many factory owners opted to stay with steam.
In the end, it took decades for factory owners to figure out how to make the most of electric power. Eventually, they discovered that the best approach was to put a small motor on each individual piece of machinery. Since a factory no longer needed to draw power from a central engine, its equipment could be spread out. This, in turn, changed the nature of industrial architecture. Buildings that no longer required reinforced ceilings to house shafts, belts, and pulleys could incorporate windows and skylights, of the sort we know today from urban loft buildings.
Inertia, David found, had been part of the problem. Factory owners who had spent a lot of money and time building physical plants organized around central-drive trains were reluctant to commit to complex, expensive overhauls. There were imaginative obstacles: powering each machine with its own individual motor may seem like an obvious idea now, but in fact it represented a sharp break from the centralized-power model that had dominated for the previous hundred and fifty years. Finally, technological barriers stood in the way—small issues, compared to the invention of electricity, but persistent and important ones nonetheless. Someone, for instance, had to figure out how to construct a building-wide power grid capable of handling the massively variable load created by many voltage-hungry mini-motors being turned off and on unpredictably. Until that happened, it was central power or bust.
-- Cal Newport, “Why Remote Work is so Hard and How it Can be Fixed,” May 26, 2020
We still live in a centralized world, with centralized thinking. Bitcoin doesn’t fit yet.
Others will understand, in time
At this early stage in bitcoin’s development, most people do not need to care about any of that. Others will do their thinking for them.
When Volta built the voltaic pile, few people realized the big revolution that came from electricity, namely, that you could supply power to anything, anywhere, any time.
At the time, it didn’t make sense. How could you make energy by dipping some metals in salt water? And why on earth would you do that, anyway? You can already get enough energy from humans, mills, and steam pumps!
Only a few people got it. Even then, it took decades for inventors and engineers to put electricity into machines, then decades more for those machines to go mainstream.
With the pace of modern invention and production networks, you can guarantee we won’t have to wait decades for bitcoin to go mainstream. Some would argue it already has.
My point is, we’ll have to wait a while longer for people to appreciate the true revolution.
For next few years, as bitcoin’s price goes up, people will focus on money.
They will read websites like What is Bitcoin and come away with the idea that bitcoin is a new type of money, but not much beyond that.
Once we get more real-world products and services, people will get a better picture of what it can do.
Developers will continue to deliver better applications. New products and services will sprout up seemingly overnight. Altcoins will solve some of the problems bitcoin can’t solve (yet).
Many decades from now, everybody will use bitcoin without even thinking about it.
Only then will you realize how truly revolutionary it is—and how lucky you were to play a small role in its development.
Mark Helfman is a top writer on Medium for bitcoin. He also publishes the Crypto is Easy newsletter. His books, Consensusland and Bitcoin or Bust: Wall Street's Entry Into Cryptocurrency,iexplore the social, cultural, and business challenges of cryptocurrency. In a past life, he worked for U.S. House Speaker Nancy Pelosi.
Previously published on Voice.com.