Please consider putting a little of your money into Bitcoin – and sooner rather than later.
That’s it! Making this request is the sole purpose of this blog post.
I will explain why I’d like to see this but first a disclosure I would like anyone considering risking any money to think about: I am personally heavily invested in bitcoin and I am also selling physical bitcoin ‘Casascius’ coins. So not only do I indirectly benefit every time someone buys bitcoin from anyone anywhere but interest arising out of this piece could result in physical bitcoin sales for me and direct profit. So feel free to question my motives for writing this in the first place.
Given the amount of negative Bitcoin press coverage since the price crashed about a month ago* people could be forgiven for believing Bitcoin was a fad that is on its terminal decline. And while considering whether or not or how much money to put into bitcoin please keep in mind the naysayers may be right. Not only could the technology theoretically totally fail wiping out all value but also a probable consequence of one or more major world governments attacking bitcoin is that its value could fall through the floor as the door to mainstream use is closed for the foreseeable future.
I’m not going to try to persuade you these disaster scenarios are unlikely although needless to say I would not be anywhere near as heavily invested if I thought them very likely. What I’d like to see is those people I listed above each spending say £20 (or some sum that would most likely to have been spent on something frivolous and unnecessary) on bitcoin. And whilst I would always like to see people researching, learning about and understanding the ins and outs of Bitcoin I would in this instance recommend your looking at your bitcoin purchase as a ‘punt’ as if on an outsider at the dogs. I’m saying I wouldn’t want your lack of understanding of the intricate mechanisms and underlying economic principles of bitcoin to hold you back from spending a little money just as not knowing the trainer, training regime, in depth understanding of form and probability theories wouldn’t hold you back from backing the dog whose name you fancied on a night at the dogs.
So why am I asking you to do this? If Bitcoin did take off even to a tiny proportion of its potential one consequence would be a one-off significant worldwide redistribution of wealth and I’d like to see a higher proportion of the beneficiaries, and the consequent economic power, in the hands of good people in general and my kind of people in particular.
There will never be more than 21 million bitcions in existence. And a consequence of this finite number having been built into the protocol the only way Bitcoin could ever become widespread is if its value was orders of magnitude above what it is today. In practice, assuming bitcoin does not fizzle away, this means people who have bitcoins early on will see the value of their bitcoin holding increase in value by the same orders of magnitude. This aspect of Bitcoin makes for a characteristic that many find undesirable because it would appear to reward early adopters by an immensely disproportionate amount relative to the risk they took. Others take it further calling Bitcoin a Ponzi or pyramid scheme, likening it to Tulip Mania or laughing at it as a bunch of mugs searching for the ‘greater fool’. Invariably those who are most dismissive simply don’t understand enough about it but I will accept there is something unfair about the extent of the disproportion of early-adopter rewards. However I also tend to think without this attractive aspect Bitcoin wouldn’t have got to where it is today let alone where it might go in the next few years.
So given that it is what it is if someone is going to be making disproportionate gains relative to risk and as a consequence increasing the buying power of a bunch of people I have my preference as to the kinds of people I’d like to see wield that power.
Relative to population size whilst Russia, Finland and the US are big Bitcoin users in China last week nearly 40,000 copies of the main Bitcoin wallet was downloaded in merely three days after a state-controlled TV programme featuring Bitcoin. Because of its ‘pseudonymous’ nature we don’t really know who is using or what for it so my assessment is likely to more reflect my prejudices than fact! However I’ll have a go anyway: In the former eastern block I’m afraid my suspicions are it is not mainly those of highest integrity using it for constructive purposes. In the US it appears to be largely techies and anarcho-capitalists whilst in Finland it appears more to be a cross-societal mix.
I would like to see London continue as a world financial centre and I believe Bitcoin has the potential to give a bigger kick in the behind to banks’ damaging practices than regulation ever could. But this does mean unless there’s enough bitcoin in London when this all happens we could lose out to countries and cities who got in earlier. Having said this, my ideal would be that it be adopted by creatives, productives and traders of real goods and services worldwide before the private and central banks catch on to what’s going on. It would mean their having to come to us for for their bitcoin rather than vice versa 🙂
So how’s about it? Can you put your hand on a few fivers floating around that you wouldn’t miss? Do you fancy having a little stake in this game?
* If you’re not familiar with the prices relative to the pound, from the first few days in April it shot up to more than double and has since the last few weeks overall gone back down to where it was.