Reflections on Bitcoin – 8: The Coming Digital Anarchy
The pace of all things Bitcoin is picking up. On the tactical front, Expedia has announced that hotel reservations can be paid for with Bitcoin and processed through Coinbase, the Bitcoin payment processor. Expedia reportedly has plans to extend Bitcoin purchases to airline and car rental reservations in the near future. To Expedia, the new development is just another way to pay: Credit card, PayPal, and now Bitcoin. With more than one million digital wallets out there, plenty of consumers are ready and able to use BTC to pay for things. I continue to predict that Amazon, Apple, eBay, and other biggies will announce BTC support in the months ahead.
On the strategic front, I read two very interesting articles about Bitcoin this week. Stephanie D. Alexander at Law360 wrote a very interesting article about How Bitcoin Will Bring About A Legal Practice Revolution. Bitcoin operates on a distributed infrastructure called the blockchain. The blockchain is an online ledger that keeps a record of every bitcoin transaction. It is open, transparent, accessible, and searchable by anyone. You might wonder what the blockchain has to do with law. Ms. Alexander says, “The answer is basically everything.” She explains that contracts can be created and executed on the blockchain. No more 8 1/2 x 14 legal documents, and maybe not so many $500 per hour charges to do (sometimes) simple things like closing a real estate transaction or executing a will. Imagine a transaction where multiple people agree to exchange or distribute certain amounts of money at certain times and under certain conditions. Those details can be “coded” into a digital framework and executed on the blockchain where a clear and always accessible record of the transactions will be maintained. There is much more. If you are a lawyer, I highly recommend reading Stephanie’s article.
If “revolution” seemed like a strong word to describe what is going on with Bitcoin, how about “anarchy”? Matthew Sparkes, Deputy Head of Technology at the The Telegraph, wrote about The coming digital anarchy. Sparkes believes Bitcoin is here to stay and will become pervasive, not just for financial and legal transactions, but for just about everything. His article is a longer read, but I highly recommend it, even though I do not buy in to all of it. Here is a flavor of his thinking. “Until recently, we’ve needed central bodies – banks, stock markets, governments, police forces – to settle vital questions. Who owns this money? Who controls this company? Who has the right to vote in this election? Now we have a small piece of pure, incorruptible mathematics enshrined in computer code that will allow people to solve the thorniest problems without reference to “the authorities”.” Some parts of the article may seem extreme and fictional, but as mentioned here before, so did the World Wide Web in 1994. One aspect of the article I found particularly interesting is the use of the blockchain for email. Imagine a system where there is no central email provider. All of us become our own provider in a peer-to-peer network. All of our email is encrypted. Nobody at the government nor advertisers can read our mail. There is a permanent record of every message. Sound fictional? Bitmessage is an app that can do all that and more. I downloaded and installed Bitmessage on my Mac and am ready to go with an email address of BM-NBomYcSGkMGarxrFVu9zwQ933uT8KBkc. The address is anonymous and looks very much like a Bitcoin address, but needless to say, nobody is going to be able to guess it, and it is really private. All I need is someone with a Bitmessage address that I can send a message to.