I was amused by the juxtaposition of two tweets in my timeline this morning.
Ron Tolido, Cap Gemini’s CTO for Application Services, implied that Bitcoin is a bubble:
We've known stuff like Bitcoins for centuries in the Netherlands. Used to call it Tulip Mania en.wikipedia.org/wiki/Tulip_man…—
Ron Tolido (@rtolido) November 20, 2013
Right below him was a series of comments by Andreas Antonopoulos, of which this is typical:
AndreasMAntonopoulos (@aantonop) November 20, 2013
They can’t both be right. Or can they?
My take is that yes they can. And the reason is because Bitcoins are not the same as Bitcoin.
Bitcoins are currency units that can be owned and transferred using the Bitcoin network. Today, they trade for, say, $600 and their exchange rate with other currencies is, currently, very volatile. Ron is quite right to imply that we have no idea what one Bitcoin is worth and, regardless of what a “fair” value might be, one can expect a violently random walk on the path to that value. Frankly, it’s a mug’s game trying to predict it and it is my intent never to comment, speculate or otherwise comment on this side of things. It simply isn’t all that interesting. And I think Ron is right to inject some calm into the debate (this post is not a criticism of him!)
But I think that he may also have rather missed the point. The innovation of Bitcoin isn’t the creation of a new asset class or a get-rich-quick scheme – Bitcoins as a currency are just one application for the core technology of the Bitcoin network.
And as an architect, it is this underlying architecture that I am focussed on: the underlying genius of Bitcoin is the invention of a globally distributed and decentralised digital asset register, enabled through a stunning breakthrough in computer science: distributed consensus. It is an open platform for money, if you like.
And I think that is the key insight: in public debate, we need to distinguish between a particular application of the Bitcoin network and the network itself.
In other words, think of Bitcoins – the Bitcoin currency – as like a dotcom stock. Perhaps it is amazon.com. But it could also be pets.com. Who knows. Frankly, who cares?
But the Bitcoin network, should be thought of as analogous to the world-wide web itself: the enabling technology.
The lesson I take from history is that it was the platform that changed the world – and that’s why my focus is on the bitcoin network, not the random gyrations of the bitcoin currency.
(Disclosure: I never thought I’d have to write this but the recent price moves mean that, notwithstanding all the discussion above, I feel honour bound to disclose that I own a very small number of bitcoins.)