Last updated on October 13th, 2017 at 11:00 pm
This article is based on the experience, observation and opinion of the author.
Yesterday Coin Brief published an article titled,”Bitcoin’s Future Depends On You“, to act as a call-to-arms for the community. With the recent turmoil in the digital currency world, and frantic worrying about the recent downtrend, many people seem to be lost with regard to how to bring new people, new ideas, and, potentially, more buying pressure into the market. While new people and new ideas are certainly needed, as Bitcoin (or digital currency in general) can only truly grow if more people become involved, the focus on price is unhealthy.
The price of BTC is important, of course, but it’s importance has been elevated by speculation and people expecting to get rich. This mindset is toxic, because when people that have been drawn in with the promise of increasing their personal wealth, but the opposite happens, there is a high likelihood that they will become resentful and angry. That can lead to people who do understand the usefulness of Bitcoin, and the benefits of digital currency, but have a grudge against those that they feel have misled them, which, in turn, can become a grudge against the entire community.
How To Promote Bitcoin Without Promoting Speculation
The goal that the community should be focused on is promoting awareness and understanding of Bitcoin, the blockchain, and digital currency in general. Once people understand why Bitcoin’s blockchain is such a revolutionary breakthrough, and can see the potential applications of it, they will likely be sold on the idea. Even if they do not decide to immediately exchange any of their national currency for Bitcoin, Litecoin, Reddcoin, Primecoin, or any other digital currency, it plants a seed for future conversations. When there is big enough news about digital currency that it reaches mainstream channels, they will be able to accurately explain it to their friends and family. Awareness promotes awareness, and Bitcoin should move toward the dream of “critical mass” more quickly with each individual that is convinced of it’s potential. When the usefulness of digital currencies begins to expand, many of these people that are aware of them, or may become aware of them in the future, will begin to jump in. It isn’t about adoption today, but about preparing for adoption in the future.
What People Should Know About Bitcoin
For many in the community, it seems to be quite difficult to put themselves outside of the digital currency world and think of it objectively. I know this is something that I have often struggled with, as I am always thinking about what “could be” in 5, 10, or even 20 years. However, for the dreams of myself, and the community, to come true, people need to understand the benefits of Bitcoin.
Bitcoin’s Blockchain Was a BreakthroughThe blockchain is the heart and soul of Bitcoin, but the vast majority of people who actually DO know about Bitcoin, but have not been involved with it, do not seem to know anything about the blockchain. I’ve spoken with some that have had it “explained” to them before, but not in an easily digestible way. The average person is unlikely to be interested in, and does not need to know, the technical details of how the blockchain works. Instead, what they need to know is that:
- It is the reason that Bitcoin is so important.
- It is a publicly viewable record keeping system that keeps track of every fraction of a Bitcoin, and is used to verify that every transaction is legitimate.
- It prevents counterfeiting, protects ownership, and controls the creation / release of new BTC.
- Rather than being stored on some privately owned server, or controlled by some government / company, it is instead controlled by a network of specialized computers that anyone can join.
- The software that controls this can be read by anyone (that understands the programming), and thus could not be altered in a nefarious way.
- Every change to the underlying software must be agreed upon by consensus in the community in order to be implemented, and is generally reviewed by thousands of individual programmers around the world.
- It solved a decades old problem in programming and networking that prevented systems like Bitcoin from succeeding in the past.
Bitcoin Transactions Are Permanent and Virtually InstantSome current payment processing companies provide the illusion of instant transactions, but those transactions can be ripped back, frozen, or manipulated at a later date, and they are not truly instant. Going through traditional channels to send money can actually take hours, days, or weeks to get sorted out behind the scenes, which is part of the reason for high transaction fees and mistakes in accounting. When a Bitcoin transaction is sent to the network, it is generally available to see within a few seconds, and at that point, the transaction is complete. The funds are now in possession of the receiver, and cannot be reversed.
The “confirmation” process is often confusing when explained in detail, but the easiest way I have found to explain it is that it is a security featured that causes the network to double, triple, quadruple, etc. check the transaction to make sure it is valid. In practice, the confirmations mean very little in almost every case. Users should wait for at least 1 confirmation before sending any of the coins they received, as sometimes a transaction will not be accepted by the network if it includes coins that have 0 confirmations, and they should wait for 2 or 3 confirmations, at least, before sending anything valuable to someone that they do not trust, but that is just erring on the side of caution. In reality, faking a transaction in a way that would get even 1 confirmation would be extremely difficult, and in most cases would take a significant amount of luck as well. Even if a user wants to wait for 3+ confirmations on every transaction they receive, that still is only 30 minutes on average for the transaction to be verified to the point of being statistically improbable that it is fake, and is truly unnecessary. You are more likely to have someone pay you with counterfeit USD (or another currency) than even attempt to send a fake BTC payment, as the rate of success with counterfeit USD is much, much higher.
Bitcoin’s Transaction Fees Are Incredibly Low
Bitcoin transaction fees are actually not even required, but should be included, as not including a fee can cause delays on the transaction being processed. That being said, the base transaction fee is enough for normal transactions, and is the equivalent of a few cents in USD. The transaction fees for traditional payment methods vary, but are generally either a flat fee that is hundreds-thousands of times the cost of a BTC transaction (wiring money generally cost $10-20…sometimes more), or are a smaller flat fee combined with a % (credit, debit, PayPal, etc). For example, PayPal charges $0.30 + 2.9% for processing sales transactions.
Bitcoin’s transaction fees are so low, the traditional payment processors actually cannot compete, as it costs them much more to process each transaction (on top of taking more time) than Bitcoin charges. This is just a matter of efficiency. Bitcoin’s blockchain and software are automatically handling the processing and verification for each transaction, which is happening via Bitcoin “mining” machines. There is no human element. There is no company that needs to make a profit on top of paying it’s employees. There are only the miners, and they don’t require anywhere near the amount of compensation that a company would need to handle the same transactions.
Bitcoin is Only the Beginning
Bitcoin itself is a breakthrough, and is quite amazing. That being said, the potential of the blockchain does not stop at currency. It can be used for anything from contracts, to stock, to running decentralized programs, websites, and so much more. There are many talented developers working on various projects with incredible potential. Some, such as CounterParty, are based on Bitcoin’s blockchain, and tied directly to Bitcoin. Others, like Ethereum, are building completely new systems that will provide functionality that has not been possible before.
The important part here that people should be aware of is that no matter what happens with Bitcoin, it is worth taking the time to understand it. These new systems are working to revolutionize the internet, and potentially the world’s economy as a whole. Everyone should work to understand how Bitcoin, and the systems that have grown out of it’s central ideas, function, and become involved in one way or another…even if that is just keeping an eye on the developments. While I cannot predict the future, I am quite certain that blockchain based systems, or systems utilizing the core design of it, are going to be quite important. However, in the end, which ones will succeed and which will fail will be determined by the people, and it is in every individuals best interest to be part of that decision making process before others find a way to force their own agenda.
Coin Brief has a “What Is Bitcoin” article that explains Bitcoin in a bit more detail than this, and can be useful for anyone that would like to get a greater understanding. It is still aimed toward being less technical than some other sources, but can sometimes be a bit much for someone with no prior digital currency experience.