I’ve been reading The Internet of Money by Andreas Antonopoulos recently.
You can buy the book here, it’s based on his lectures from a few years ago now!
Below I’ve selected a few quotes from chapter four which focuses on the disruptive potential of Bitcoin.
Below I’ve selected a few quotes from chapter four which is on Bitcoin in the context of the history of money, and offer a few thoughts...
Innovators, Disrupters, Misfits and Bitcoin
In this chapter Antonopoulos takes a look at Bitcoin from the perspective of the innovators (the misfits) - the people who see an elegant, half working technology and focus on the elegant aspect, not the part that isn’t working, the kind of people who see potential in innovation maybe a decade ahead of the curve.
If we write the history of tech in glowing terms and forget about the early innovators who get laughed out of the boardroom 10 years ahead of the curve saying they are going to disrupt everything. Bitcoin is like that!
The dangers of automobiles, electricity and Bitcoin
For the first two decades of the earliest cars they were ridiculed by the mainstream media as being pointless and dangerous: less efficient than horses, requiring expensive gasoline and infrastructure and being noisy and dangerous.
The most extreme negative reaction to the car was in the U.K. in the form of the Red Flag Act in 1865: a car required three people to operate it - a driver, engineer and a person carrying a red flag running 100 metres ahead of the vehicle to warn pedestrians.
By responding to this new tech with fear and hobbling it, removing all of its advantages and potential, the UK missed out on the many future advantages of having an early car industry.
The mistake the UK made was to view the car from the old perspective of horses, and the sad thing was that up until 1865 the industrial revolution meant they were the first to produce functioning cars, but their fear and legislation nobbled that!
There is a long history of society reacting negatively to technology. It happened with electricity, when the media focused on the risk of homes burning down and electrocution when the first houses were wired up, it happened with computers: the head of IBM once said we’d need ‘five’ computers max globally.
And now we see the same reaction with Bitcoin: it is being cast as complicated, unnecessary, and used by freaks such as drug dealers and terrorists.
However many technologies are first used by criminals and this is because they operate in a high risk, high profit environment where use of cutting edge technologies can give them an advantage.
But by now Bitcoin is becoming mainstream, even if it is ignored by institutions, but it is often the way that by the time institutions catch up, it is already too late.
In fact, the kind of disruption Bitcoin is bringing to the banking industry has already started, and there is no going back!
There’s a lot of useful reminders in here about just what a disruptor Bitcoin is, in fact this section is maybe the first in the book where Antonopoulos REALLY talks about Bitcoin like it is a technology, rather than just money. By relating it to, for example, the motorcar, we can really see Bitcoin the tech (the decentralised consensus based programmable communication protocol if you like) rather than just a currency, the value is sort of tagged on!
And I like the bit about criminals using it, just dismissing it out of hand as a concern - ‘yeah, that happens!
Incumbent Reactions to Innovation
First, those with incumbent power ignore new technology, then they mock it, and then finally they realise they need to get on board with it, and by that time it is too late.
This happened with Kodak: dominant in the camera industry, and destroyed by Nokia within a few years who didn’t even make phones previously, and Tower Records were brought down in a similar timeframe by MP3s.
And this happened in computing.
IBM used to dominate Operating Systems, then Linux came along and now 80% of phones run on it, IBM has stepped out of developing operating systems. And Linux was initially developed by one person, compared to the teams of PhD students who used to build operating systems.
That is the power of open source versus closed systems.
This will be the case with banks and Bitcoin. Banks are run by crooks, they have delivered only TWO innovations in 50 years: credit cards and ATMs and spent the rest of the time figuring out how to fleece their customers, this is why banks will lose to Bitcoin.
Starts with a fairly cliched opening, but backed up with some nice examples at least, fair enough!!
Open Innovation and Opt-In Systems
The problem with the banking system is that its security rests on a centralised authority vetting and excluding bad actors. In order to keep it secure most people are denied access to any level of control of the network, other than depositing and withdrawing.
However the problem is that in 2008 we discovered that the bad actors are the ones who control the system itself when the banking system destroyed millions of homeowners, savers and retirees.
Bitcoin doesn’t depend on access to control to remain secure. There are plenty of crooks and hackers trying to manipulate and gain from Bitcoin but they don’t gain control because Bitcoin’s algorithm ensures that it’s more profitable to not attack the network and aim for consensus instead.
Bitcoin is like a giant game of Sudoku, it’s pure game theory.
Bitcoin is a completely open network. Anyone can connect to it. You can write an application right now, connect to the bitcoin network, and teach it to do something new, you don’t need to be vetted or verified.
Bitcoin is growing faster than Twitter or Facebook did in their first three years, because of its open access.
Bitcoin isn’t a currency, currency is just one application that runs on the network, so there is huge potential for growth.
And no one is going to screw you, because it’s an open network, you can choose to opt in, and if you don’t like what’s on offer, choose to develop your own application.
I can’t get enough reminders of the fact that the mainstream central banking system is run by a bunch of crooks!
Including another 6 Billion people
There are 2 billion people with no access to banking and 4 billion with limited access. Bitcoin will make it easier for those people to access banking, with just a mobile phone.
$550 billion is transmitted in remittances every year from people in rich to people in poor countries, companies like Western Union take a 9% cut of that, with Bitcoin we can cut out most of that fee.
Bitcoin will change the world
Like the car and Linux did!
Well more people are being brought on board and the banking system hasn’t shown any signs of reform in the last decade since this talk was given.
One final thought…
I am an Antonopoulos fan but there’s nothing in his writings that makes me think I have to buy Bitcoin in particular.
Why Bitcoin rather than any other crypto? I get the feeling in these talks he’s talking about Crypto in general, anticipating future developments of more chains.