While everyone and their mother are busy crying “I told you so!” and “No, Bitcoin is the future, just wait!” after the 50% drop from this morning’s high, I’ll take a few minutes to explain why Bitcoin is relevant.
Accepting payment as a business
When I started my business, I had to accept payment from my customers. Few realize how hard it is to get paid. Notice I didn’t said ‘make a product’, or even ‘market the product’, no: getting paid is hard.
Cash? Well no, of course my customers won’t send money in the mail.
So checks perhaps? Some might pay this way. To do this, I need to open a new account at my bank, because they won’t accept that I make deposit with a check that isn’t to my name. Think about it; how dumb is it that we can’t deposit money as we want in our accounts? Well because banks must protect their backs and refuse to accept anything that could be a fraud. In this case, I could have stolen or intercepted the check and tried to deposit it in my account. Fair enough. However I still have to open a new account, with all the bureaucracy and fees that follow. Note that adding a pseudonym to my account would have done the same thing, security wise, as opening a new account. But for an unknown (surely justifiable) reason, I can’t just do that.
I offer a web service, so payment by credit card would make sense. Or does it? Adult middle-class occidentals like to think that everyone have a credit card. 14 years old? You’re out of luck in many jurisdiction. Perhaps are you even in the number of countries that don’t have them? There’s also no guarantee I’ll be able to accept all credit cards. (American Express, Visa, Mastercard…) But assuming that I didn’t just lost half of my potential customers, I still have to use a credit card processor service. This means fees. Oh and there’s also the risk of chargebacks. You know, this silly thing where anyone can call his credit card issuer and say “Hey, I didn’t buy this.” Not only will the merchant lose his sale’s money, but he must in addition pay another fee. Because, you know, it’s his fault.
Paypal is like a horrible hybrid of all of the above. Can’t be used from everywhere, fees, and truly horrible stories. (And a horrible API by the way.)
Receive salary as a worker
Ever noticed that when you start working somewhere, they ask for your banking information? Want to work as an engineer? Good luck getting paid cash. It is assumed you have a bank account. You want to get paid where you work? How silly is that! It’s not as if you were going to work to get paid. Oh, wait…
This of course is just accepted as normal, because most people got their first bank account when they were very young, probably accompanied by their parents. In fact, let’s look at what the average Joe has done, banking wise:
- Asked for a bank account (sign many papers, personal IDs);
- Asked for a debit card (sign other papers, memorize PIN);
- Asked for a credit card (sign yet other papers, memorize PIN);
- Asked for checks (ok, nothing to sign here. Still a pain to write a check);
- Asked to open another account (papers…);
- Asked for web access (sign papers, create account, memorize password);
- Asked to register an account to trade stocks (sign papers, perhaps another password);
- Asked for a special retirement account (sign papers);
Then, when presented with an alternative, most people will only consider their current situation. “I can have something that is slightly better than my current situation? Meh…” (They would be wrong of course, it’s not just slightly better.)
It’s as if I had a magic machine that could teach me, in 10 seconds, the equivalent of a degree in my field. Then I would discard it as silly, because I have already studied it. Well, sure I have, but plenty of others didn’t!
Also, notice that for each step, you need to ask for something. You can’t do it yourself.
But what if you could be paid without having to deal with a bank? What if you could, with a single click, create a new account?
For the makers of this world, it’s also much more easy to work with bitcoins. Want to hack yourself a point-of-sale terminal in a few hours and try it live on your bank? Good luck with that…
How about building a casino in Minecraft? How would you hook that up with your bank?
And how about asking for tip? Now you simply have to leave your bitcoin address in a video description or a the bottom of an article and everyone can send you some bitcoins.
Bitcoin isn’t just perfect for the digital age, it’s also an environment where you can build and create things. HTTP isn’t great per se, but everything built with it gives us a rich world to explore. You can expect to have the same for the payment system. Bitcoin in itself isn’t great (it’s brilliant, but not great). It’s everything that will be built on top of it that will prove to be amazing.
This is why I’m a proponent of Bitcoin. Not for what it is now, but for what it will become. It just needs a little bit of love, and plenty of speculators!