I was invited to a high-powered lunch in San Jose, Calif. Some people I knew. Some I did not know, but wanted to. I’m on an email list with these people, and they are constantly giving me great insight into the emerging world of crypto-currency. They are all experts.
But there was a problem. I was stuck two time zones away, nearly all the way on the other coast. But hey, we have tools to remedy that problem these days. As they gathered and sat down in a noisy cafe in San Jose, I pulled up a computer application and clicked a button. Suddenly, my mug appeared on a tablet computer held by an old friend. He said hi and passed me from person to person, and I met them all individually.
I wondered where I would be seated, and hoped it would be next to someone I knew!
(I had previously asked some friends what I should say when the waiter asked for my order. Suggested answers: “megabites,” “a doggy bag,” “a power cord.”)
As it turned out, the audio quality for participating in the group conversation was a bit too wooly to be practical, but as they say, Rome wasn’t built in a day. It was enough that I had a genuine sense of being there—something inconceivable even five years ago. It was all made possible through applications that are extremely easy to use and (incredibly) absolutely free to anyone with a digital device ($100 plus) and an Internet connection.
What a world we live in! We’ve got video phone. We can lunch anywhere with anyone regardless of geography. We can send and print physical objects. Driverless cars are here. We can network and be friends with anyone on the planet through thousands of digital channels. We have information at our fingertips, seemingly endless floods of it.
It’s all happened due to vast human energy poured into what used to be called the “practical arts.” Today these are commonly known simply as technology. And this is why I’ve learned to follow the technology to know the future. The regulators and the politicians hate it and try to stop it. They can slow it down, but the technology pushes through.
A good example came up the other day. Eight congressmen sent a letter to the CEO of Google that asked a series of probing questions about Google Glass (the new Internet-equipped glasses). There’s nothing wrong with questions, but the presumption of the letter was that somehow Congress is in charge of signing off on any innovations released into the market. Hey, guys: In a free society, it’s the consumers who approve or disapprove!
OK, back to lunch. There were some seriously smart people there, but they represented only 1% of the hordes of super-smart people who were gathered in San Jose for the Bitcoin 2013 conference.
Organizers had originally planned on a few hundred people, maybe. They closed the conference at 500, but that didn’t work, either. The clamor was so intense that they renegotiated all contracts and made space for the final number of some 1,500 people! That’s a huge conference on what many people only a few months ago were dismissing as a geeky niche subject.
Actually, it doesn’t really surprise me. Once you use Bitcoin, a new world opens up to you. It is incomparably more advanced than government money. It’s a bit like the difference between getting a first-class letter and email. Another comparison might be a 78 RPM vinyl record from the 1940s and an iPod today. It strikes you immediately: This is what money can and should be like.
This is what accounts for its growth and the explosion of energy behind this invention. When you explain Bitcoin to people, the natural and normal response is something like: This is another digital fad that will come and go. Money can’t be created by a software programmer. Money is something made by governments.
Then you use it and something changes. You feel the sheer physicality of the thing. You are profoundly aware that you possess something of value. You are an owner. Bitcoin transcends its core code to become a digital replica of gold itself. More than that, it is different from having money in a bank. Bitcoin is privately owned by individuals. It is right there in your control. The usual things that separate us from our money—fees, opening and closing hours, government officials, red tape, and so on—do not exist in the Bitcoin world.
The big controversy at the conference itself was over whether or how Bitcoin should be regulated by the government. In some ways, it is tragic that the discussion is going on at all. Bitcoin has made it this far precisely because it is unregulated—a pure product of the market. But some people in the Bitcoin world—an emerging establishment, as it were—are anxious to be blessed by the regulators. They think this approach will bring some legitimacy to the sector.
The first shot came about six weeks ago when the Financial Crimes Enforcement Network of the Treasury Department made clear that all Bitcoin exchanges must register as money service businesses. That announcement caused three exchanges to close. The remaining ones had already registered, except for the biggest one in Japan (Mt. Gox), which had a U.S. pass-through affiliate.
Then just last week, FinCEN made its intention to enforce abundantly clear. It stopped U.S. payments to Mt. Gox that were being made by a dollar service called Dwolla. Treasury froze the accounts and started an investigation. That certainly had a chilling effect on those who imagined a future without excessive regulation!
Following the Bitcoin conference, a beautiful piece of news leaked that might turn out to be another game changer. Two Bitcoin exchanges in Canada (Libertybit.com and Cadbitcoin.com) were both told that they do not have to register at all with Canada’s money laundering regulatory agency. They were invited just to do business the old-fashioned way.
Why is this so significant? It shows very clearly how excessive regulations can drive away technology from any country. If the United States is going to go this direction, there are plenty of other countries willing to step up and provide necessary services. Canada helped U.S. draftees in the late 1960s. Something similar might be happening with U.S. technology in the 2010s.
Digits are the ultimate draft dodgers. Bitcoin is notably fleet of foot.