“Ladies and Gentlemen! Step right up and try one of our world-famous BBQ Pork Sandwiches! It has onion. It has pickles. It has pork. It has BBQ. All on a soft, chewy bun.
“It will only cost you 6.2 millibits of Bitcoin!”
Chances are, you’ve heard of Bitcoin; chances are, you don’t really know what it is.
I personally own 3.5 bitcoins. (Well, actually, now I have 3.4938 bitcoins.) I’m not an expert on the topic, but I’ve known enough about them to stay attuned to the development of this potential society-shifting technology.
If you’ve read my blog, you may have seen related pieces on other technologies that change the way we shape our societies–technologies that solve problems or challenge the effectiveness of law. In the realm of either camp, Bitcoin is a whopper.
Bitcoin is the name of an all-digital currency. Each “coin” is simply a string of characters. Only so many of these strings (coins) are in existence–about 12 million, and more are “mined” each day by people willing to use their computers to calculate existing bitcoin transactions. When your computers compute enough of these, you are rewarded with a bitcoin.
The details of this process are above my head. What intrigues me are the real-world aspects of people owning and using a virtual currency.
First there’s the obvious good: with adoption of a virtual currency, global commerce is streamlined. When I lived in China, I had to maneuver American dollars from my Wells Fargo bank account into my hands and exchanged into Chinese yuan. With a technology like bitcoin, I don’t have to worry about how to get the money–it’s everywhere there’s internet. I don’t need to find a Wells Fargo branch. I don’t need to pay Western Union to wire me the money. I have my bitcoin, and assuming I can find a buyer locally in China, I can sell the bitcoin for Chinese yuan.
Second, businesses are increasingly offering their services and products for bitcoin because credit card companies charge more to transact their cards than it costs to use bitcoin.
Other benefits are more subjective.
Bitcoin (and any virtual currency) makes it easier to buy things anonymously, and potentially, illegally. Want to buy marijuana or cocaine or meth? Do it with bitcoin on the internet. Want to avoid paying taxes? Bitcoin is tougher to track, so not disclosing that large sale you made in bitcoin will be easier to get away with.
These two examples point to a larger issue: the inability of a government to track and regulate commercial activity. Bitcoin is to government what file-sharing is to the music industry. It cuts its legs out from underneath it.
That’s why, in December, we saw China ban its people from buying bitcoin with their currency. The U.S. has actually been cordial with bitcoin and virtual currencies, but we await the IRS’s ruling on how it will designate bitcoin. Is it a currency like the dollar? Competing currencies in the U.S. are illegal. Or is it an investment like gold or stock? I’ve never bought a pork sandwich with shares of Microsoft.
The truth is that there never has been anything like this. And I’m assumingthat, like file-sharing, the powerful entity that is being challenged due to new technology will compromise its stance to survive. So just like we now have iTunes instead of CDs, we’ll see bitcoin as a common way to pay for services and goods, and the IRS will have to come up with rules that make it at least fairly easy for bitcoin users–individuals and businesses–to comply with.
One such business was the bar I went to last night in Northeast Minneapolis that hosted a bitcoin open house. About 30 people were there to support the restaurant/pub in its technologically progressive endeavor. And I was lucky enough to snap a photo of the very first beer bought in Minnesota with bitcoin:
Others mingled about happy for their chance to partake in this new economy:
But she had other things on her mind–like buying the second beer in Minnesota with bitcoin:
The bar calculated the bitcoin price using the current dollar to bitcoin exchange rate. Then I sent .0062 bitcoins from my phone to theirs. That’s where I got “millibits” at the top of this article.
6.2 millibits for a damned good sandwich.
We might have to get used to saying that.