The Bitcoin Way

Lessons From The Grandest Experiment In Pitching A Revolution

Colin Carter on Unsplash.com

Bitcoin is many things besides an outsize trading profit. This article looks at the history of technologies that merged to give birth to Bitcoin. It also highlights the key people responsible for bringing Bitcoin to the real world. Most importantly, this article provides the key takeaways from one of the grandest experiments in pitching a revolution. A revolution that is a combination of anarchy, distributing power to anyone with a computer globally and peacefully and pure genius that has spawned seismic financial and socio-economic paradigm shifts. Rethinking the status quo is now a process we need to indulge in every nanosecond of our waking lives. Else, we risk being blindsided by a revolutionary idea.

Carbon Dating An Idea

Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn’t want the whole world to know, but a secret matter is something one doesn’t want anybody to know. Privacy is the power to selectively reveal oneself to the world — Eric Hughes, A Cypherpunk Manifesto

It is very hard to trace the beginning of Bitcoin because Bitcoin is an agglomeration of ideas, technologies and tools that were developed over decades by various people. Some of these people never imagined that their creations would spawn a cryptographic currency.

Early 1970’s: IBM develops Data Encryption Standard-a symmetric key algorithm for encryption of data.

1991: Phil Zimmerman invents Pretty Good Privacy (PGP). An encryption software that uses a serial combination of hashing, data compression, symmetric-key cryptography, and finally public-key cryptography; each step uses one of several supported algorithms.

Late 1992: Eric Hughes, Timothy C. May and John Gilmore form Cypherpunks in the San Francisco Bay Area.

2004: World of Warcraft released which creates a market for trading digital currencies (tokens to buy stuff within video games).

Source: Stockmarketalamanack.co.uk

The timeline on the chart above begins in 2010. However, make no mistake — Bitcoin has primordial origins.While cryptography can be traced back to Babylonian times, modern cryptography is of recent origin. On the other hand, human emotions such as greed, aggression and rebellion are as old as humans. So, you see, how do you carbon date ideas spanning millennia? You don’t.

Lifting The Veil

“I see Bitcoin as ultimately becoming a reserve currency for banks, playing much the same role as gold did in the early days of banking. Banks could issue digital cash with greater anonymity and lighter weight, more efficient transactions.” — Hal Finney

Bitcoin is synonymous with the mysterious Satoshi Nakamoto as much as anonymous paintings are synonymous with Banksy. However, it took the combined contributions of the Cypherpunks, Nick Szabo, Hal Finney along with others to create the building blocks of a decentralized currency. So, the brains of the matter were spread all across the world i.e. a motley group of engineers, developers and polymaths.

Similar to Artificial Intelligence, the development of Bitcoin occurred in spurts culminating with a working reusable Proof of Work (PoW) algorithm. So, the Bitcoin venture followed a proverbial S curve except in a step fashion.

Finally, ambassadors such as the Winklevoss twins and many others then became the marketing as well as investing arm of the enterprise.

Bitcoin really was a invisible partnership (because it wasn’t a legal entity but behaved as one). It wasn’t an S-corp, LLC or any other legal vehicle but it behaved exactly like a startup albeit with protracted development over a time.

Today, it is very similar to a closely watched and differently regulated publicly traded company. That’s because for all practical purposes, it behaves like one.

The Best Proof of Concept

Wall Street Journal

Many colleagues and friends approach me for advice on how to ‘pitch’ an idea. My simple answer: let the idea pitch itself. If you are a young entrepreneur, you might have to give your products for free to a limited audience so that they become your biggest spokespersons. If you really want to change the world, you have to create a prototype of that change, operate it consistently, scale it and make it easily accessible and user friendly over a network. Sounds familiar? Bitcoin is the biggest proof of concept. It radically shook the financial services world and the world of economists by suggesting an alternative to fiat currencies.

Bitcoin fans point out that in a post Bretton Woods world, fiat currencies aren’t backed by things like gold that they were anchored too. Therefore, printing your way out a mammoth financial crises such as the 2008 housing crises devalues a currency that is the reserve currency of choice i.e. the Dollar. In effect, the value of a Dollar is what we (including governments) think it is. Tangibly, what we think is reflected in foreign exchange markets in the world. Intangibly, fiat currencies are backed by our faith in a higher power.

Bitcoin, therefore, proselytizes a different paradigm where computers and algorithms take the function of central banks. But, there is very little comfort in terms of efficient power utilization and anti-fraud controls. Ethereum and its subsequent ilk are working on those issues. These issues are collectively called a “trilemma” i.e. how do you achieve security, scalability and decentralization.

What the proof of concept in the form of Bitcoin does is it shows that things can get done. Only if we put our collective gray matter together.

Pouring Gasoline Over A Flame

Totally disregarding money, Bitcoin is a symbol of many waves of changes that are changing the global landscape today:

  1. Democratization of exponential technology to the common man. You can even buy 3D printers off of Amazon and start creating prototypes
  2. Combining technologies spanning decades to create a completely workable, global proof of concept
  3. The ability and desperate need for experts to collaborate across the world coupled with access to data on the cloud
  4. Commercialization of the Blockchain. There are magazines out there on ICO’s and on the Bitcoin universe.
  5. Application Programming Interfaces (API’s) that allow docking of different applications creating an Internet of Apps
  6. Central Bank Cryptocurrencies that will be the next wave of adoption of cryptos. The total Crypto market cap today is $248 Billion

I have been a silent witness to the unfolding of the Bitcoin saga-a neutral spectator that is so dazed by history being made that he has lost his bias for action. I have heard both the naysayers and the followers of Bitcoin with equal measure. The debate has gradually moved from Cypherpunk bulletin boards to the dinner tables of middle class households. All this while, I was watching with wonder at the evolution of an idea into a global proof of concept. My biggest learnings so far have been these:

The most profound, modern revolutions are also the quietest. The silence is so deafening that the revolution can only be felt inside. The biggest revolution is also always internal and it is called a change of heart. It is not a change in mindset because logic does not apply to the early stages of an idea. The heart stokes the fire, the gut guides and logic slowly follows. Once the global mindset changes, it becomes an idea whose time has come.

This article is neither an attempt to romanticize Bitcoin nor is it an advise to invest in it. Rather, it is to use Bitcoin as a symbol of modern day exponential changes. You think Bitcoin is revolutionary? Try Artificial Intelligence (AI) and CRISPR gene editing on for size.

Whether you believe in Bitcoin or not, the idea of a decentralized global currency that is actively traded has served a few purposes: to jolt us out of inertia, to spur a debate and to shake our beliefs around what we all agreed to be true and difficult to change — the global financial system.

As an old Billy Joel song goes “we didn’t start the fire, it was always burning since the world was turning..”, Bitcoin didn’t start the fire. It simply threw a barrel of gasoline into an already burning flame.

Writer @ The Intersection of Finance, Tech & Humanity. Stories of a Global Language: “Money”. Contributor @ Startup Grind, HackerNoon, HBR. Twitter@akothari_mba

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