Bitcoin is not smooth jazz, Bitcoin is punk rock!..

Bitcoin has long been touted as the future of finance but it's not the simplest idea to get your head around. According to entrepreneur Andreas M. Antonopoulos, this is because it's like punk rock.

Most people don't even understand money, let alone its next evolution. "We've seen four major transformations in the underlying form of money," Antonopoulos explained. They are the transition to precision metals, the switch to paper money and, in 2008, the creation of Bitcoin. "It is the most abstract form of money we have ever created," he said. "It is the least physical form of money in history."

Money, not currency; the distinction is crucial. "Bitcoin is not a currency," he said. It is a "network-centric model for recording ownership and trust". Bitcoin is the "internet of money and currency is just the first act". "It changes many of the fundamental aspects of money," Antonopoulos said. "The experience of trying to explain Bitcoin changes over time [...] the current trend is to try to make Bitcoin more acceptable and marketable, to whitewash the currency into a more vague 'disruptive' technology and re-brand it. But that won't work; at its core, Bitcoin is "open, decentralised [...] completely without borders".

The core reason Bitcoin will be disruptive on a previously unknown scale, is that it solves the number one problem in consumer finance; identity theft. In traditional banking personally identifiable information is collected at every stage of a transaction and "no one can protect that information". Not even the US government can protect that information, he said. "The only way to protect personally identifiable information is not to collect it." Bitcoin does not rely on that information to create trust, hence it has a fundamental advantage. "You want disruption, here you go: radical disruption [...] Bitcoin is not smooth jazz, Bitcoin is punk rock: deal with it. It is disruptive and the reason it is disruptive is why it is so difficult to swallow... If you can't swallow that pill, there is a startup out there which is going to take that innovation and disrupt your industry."

That volatility is irrelevant, said Antonopoulos, when it comes to the long-term future of Bitcoin. "One thing Bitcoin does is refuses to die," he said. "There is no centre, there is nothing to co-opt, there is nothing to stamp-down." The largest opportunity may be what it means for the six billion people around the globe for whom the traditional mechanisms of banking are not available. "Bitcoin offers the possibility of brining banking to feature phones over SMS," he said. There are more people with access to feature phones than have access to clean water. "Bitcoin can deliver baking services not by banking the un-banked, but by de-banking all of us. Bitcoin can do that either under the flagship title Bitcoin or whatever name you want to plaster on to make it more palatable."

The lesson for attendees at WIRED Money 2015 – who included investors, banks and banking start-ups – is obvious, he says. "When faced with massive strategic disruption of that scale there are two places to be: you can be Blockbuster or you can be Netflix."

It is also important not to focus on the 'Blockchain' over Bitcoin. "The Blockchain itself is boring technology... it's Quicken, only slow and distributed," he said. "If you think the end result of this is that everyone will be able to run customer services on their smartphone, you're missing the point," he said. Within ten years a teenager will be able to run an entire bank on their smartphone, using Bitcoin. By the time they would be able to open a bank account they would be just as likely to buy a fax machine as open a bank account.

What Bitcoin can't do – at least not yet – is solve headline-grabbing crises like that affecting the Greek economy. "Greece is not ready for Bitcoin and Bitcoin is not ready for Greece," Antonopoulos told WIRED editor David Rowan.

The problem is liquidity, and "the problem is not solved by switching currencies". What Bitcoin can do is provide a safe haven for savings – at least relative to the banks. "Bitcoin is about people having a safe haven out of the current currency control systems," he said. It is also non-national, heralding a moment where governments lose all control of money. "One day, perhaps in ten years, we will see massive disruption from that," he said.

Jazz Sidana
FinanceBoutique
Http://financeboutique.com.au/