Welcome to the CoinDesk Weekly Review 20th April 2014 – a regular look at the hottest, most thought-provoking and most controversial events in the world of digital currency through the eyes of scepticism and wonder.
John Law takes his leave, but not before compressing the entire week’s news.
After practically a year perched somewhat unsteadily at CoinDesk’s in-house bar – they like to keep it exclusive, but the absinthe cocktails are to die for – it’s time for John Law to move on. This is the last of these weekly columns.
So, let’s get the week’s news out of the way. What did we learn over the past seven days?
It’s good news if you want to turn your old mobile phone into a pile of top-quality skunk weed, a trick that until now was known only to the pick-pockets of the Holloway Road. Now you can do it yourself, and legally too: send your redundant device to the tech resellers at CeX, they’ll put it online, and when someone buys it they’ll pass you the proceeds in bitcoin. Then, take a plane to Colorado and give your bitcoin to ZaZZZ’s automatic dispenser of the chronic. Job done, entirely by computer. Truly, the future is here.
Alternatively, if you have a lot of old mobile phones and no particular fondness for exotic cheroots, then you can repeat the CeX trick until you have around $11 million and then buy a luxury yacht with it. To be honest, that’s the sort of daft trick only Silicon Valley billionaires or over-coked rock stars go for: nobody can say the luxury yacht business doesn’t know its customers.
What else? American finance officials warm to bitcoin while China continues to disapprove; there are new exchanges in the works; Mt. Gox is filing for liquidation; Nick Szabo has been unveiled as Satoshi Nakamoto – again, unless he isn’t – because he uses phrases like “trusted third parties” when writing about cryptography.
Amazon doesn’t want your bitcoin and Wikipedia’s still not sure; ATMs and ASIC miners are cool (figuratively, in the case of ASIC miners); online fraud is not; and while you still can’t buy sex with bitcoin one canny app developer cashed in when the price was over $1000 and wrote an iOS dating app – which is close enough, if you fancy Apple users. John Law has always found Android fans more open, more flexible and cheaper dates, and they come in an exotic variety of sizes, which keeps a chap interested. Although - of course - the risks of catching something nasty are somewhat higher. The price of freedom.
That’s pretty much it for the week, and the most surprising thing? There are no surprises. If you’ve been following along at home, you’ll have noticed that shock and awe is no longer the name of the game. There may be – will be – more stories about clever criminals doing bad things, but Silk Road’s demise has lanced the boil of OMG ANARCHY! that was still pustulating away in 2011. China has loved and lost, but bitcoin’s still here and more than twice the price it was a year ago. The starry-eyed are still gathering in San Francisco to urge each other on to ever greater feats of optimism.
Business, in short, is as usual. There is a usual now.
So: what next?
With your permission, distant reader, John Law would like to share what he’s going to be watching most closely for real surprises as bitcoin leaves its terrible twos and settles down as a more placid child of the 21st century.
1. Bitcoin will stop being virtual
You can’t miss the Internet of Things, where all our gizmos talk to each other – and to big data-driven companies and governments – to automate our physical environment. It won’t be long before our gadgets are making buying decisions on our behalf, and how will they swap value between themselves? Has to be bitcoin-like technologies.
And now there are ways for bitcoin to attach itself to anything digital through coloured coins, and anything physical can have a digital side built into it. Physical things will be able to carry their own guarantees of authenticity and ownership. No trusted third party required. Everything, in short, will stop being nickable and start to be tradeable with no paperwork. That’ll be a shock to the system.
2. Bitcoin will change the law more than the law will change bitcoin
If you’ve got a few minutes, go and look up the idea of polycentric law. Not exactly a new idea – and one that describes how law has worked many times in history. It simply says that you don’t need a monopoly of law. You can have many overlapping systems at once, and people can agree to use different law systems for different tasks.
They have to be largely compatible; they don’t have to be the same. So it’s possible, and John Law thinks likely, that people who use bitcoin will agree to behave to a different set of norms than they do with cash. The chances are high that this will be an international affair.
Rather more fancifully, it may yet foreshadow a greater move away from state-defined legislation towards a more devolved social contract; the Internet and ever-growing travel habits are mixing parts of society, mostly the young, across borders far more than ever before. In twenty years, they’ll be making decisions for us.
Things will change, and bitcoin will lead the way. The law will follow, not least because it’ll learn that bitcoin’s astonishing transparency will reveal ever-increasingly interesting things about what we’re all up to.
3. Bitcoin will die. Long live bitcoin!
We need a World Wide Web for the bitcoin idea, something that will do for it what the first Web servers and browsers did for the Internet. Before the Web, you could do almost the same stuff you can now – you could search, you could download, you could publish, you could email – but you had to be a right geek and none of the tools worked well together. They worked well enough to show what the Internet’s underlying technology could do, but you had to really want to use them.
Then came the Web and ker-pow! Convenience amplifies. Bitcoin may well evolve into something that feels natural and universal, but it doesn’t now and there may be a much better way of doing the same thing much, much better. Watch the altcoins.
John Law, being quite the geek himself, will also be following the development of the underlying technology: things need to be fixed in mining, in block chain management, in security and in distribution of resources. They will be fixed, but the details will be delicious.
He’ll also carry on learning how money works, which is a fascination he feels far more keenly now than when he started writing about that darn cryptocurrency thing. He warmly recommends you do, too, even if it’s just to be able to wow impressionable young things at parties when they ask “So, what is this bitcoin stuff anyway?”. And you thought fiat was a small Italian car.
Adieu, readers. Thanks for all the kind messages - and the nasty ones, which were most amusing. A year in bitcoin is like seven in any other Internet technology, and given that a year in Internet technology is like seven in the real world, that makes a year writing about bitcoin roughly equivalent to 49 on the calendar. That’s practically a career’s worth. Hard work. No wonder John Law feels quite so thirsty.
Oh, OK then. One for the road.
John Law is an 18th Century Scottish entrepreneur, financial engineer and gambler. Having reformed the French economy, invented paper currency, state banks, the Mississippi Bubble and other ideas essential to modern economics, he took 300 years off in a small cottage outside Bude. He has returned to write for CoinDesk on the foibles of digital currency.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.