My stepfather cut right to the case. Peppered with questions about the best mining strategies and equipment, I was relieved to deliver him the bad news in time to protect my poor mother from coming home to a sweltering living room packed with whirring ASIC miners. Thanks to the pretty good Bitcoin coverage in the Journal, said mother–a proud daily reader–had already gleaned an impressive understanding of the fringe-to-riches cryptocurrency. We recommended Litecoin instead. We talked about Bitcoin’s attractive properties as a payment system and a platform for financial innovation. My sharp Gen Selfie sisters got the picture faster than the network verifies new blocks. When I was drawn into another conversation, my little brother ably tackled my grandparents’ lingering questions. It was a little surreal.
Others had similar experiences during their pilgrimages home. My boyfriend learned that his badass 14-year-old cousin had been mining for some time. My friend’s parents jazzedly talked Bitcoin Black Friday between canine categories of the National Dog Show. They weren’t the only ones; while the post-turkey buying bonanza of the paleoeconomy sinks to new lows in revenues and taste, Bitcoin’s first coordinated sales day set a new record for commercial transactions. The hot gets hotter. A successful rainbow tour, coy Chinese intrigue, and even techno-futurist space glamour have helped push Bitcoin’s value to impressive peaks. And boy, do people want to talk about it.
Though the forum-dwelling faithful have developed counterarguments to the proposed problems of volatility and deflation since Satoshi first flew the coop years ago, it took respected endorsements and a flash of gold to catch the true consciousness of the Smart Takers. Weisenthal, here, is our lagging indicator of these changing winds. A worthless “clown currency” Ponzi scheme no more, Bitcoin is now more broadly understood as an affordable payments system–albeit one that primarily benefits sneaky Macanese casinos. (Of course, others cling to the Segway school of thought). More sophisticated analyses consider the potential of the protocol itself. However, these are sadly scarce. Because the price is still the focal point of most perspectives, they still only scratch the surface of Bitcoin’s untapped possibilities.
Consider the recent price fluctuation. Drowned out by the usual, boring chatter of tulips and end times was a low-key announcement from a scrappy start-up with big plans for Bitcoin innovation. It’s a real doozy.
Bitrated aims to offer free, secure third-party arbitration services by tapping Bitcoin’s largely latent multisignature transactions capabilities. Also called m-of-n transactions, these higher-order agreements allow for limited transaction reversibility, constrained joint wallets, and self-enforcing arbitration. By creating and sending funds to a special Bitcoin address with n number of known public keys, buyers and sellers can engage in conditional transactions overseen by a designated mediator. Unlike traditional Bitcoin transactions, at least two of the three (or m of the n) parties must sign the transaction for it to take effect. If both buyer and seller are pleased with the exchange, then their two signatures verify the transaction and it completes. In the case of a dispute, the buyer and seller will appeal to the arbitrator to adjudicate the matter according to initially-settled terms. Eventually, Bitrated hopes to augment its arbitration listing service with ratings and credentials for excellent arbiters.
Are you getting this, Internet people? We are firmly in Bruce Benson territory now. The Bitcoin protocol can, and now does, provide self-enforcing, decentralized alternative legal institutions. Other theoretical applications and add-ons to the Bitcoin protocol can cultivate smart property and contract markets, complete privacy in transactions, and digital common pool resource mechanisms. The self-styled “world’s first stateless company” recently incorporated itself in the blockchain–because it could. We may, as Eli hopes, witness the development of a “common law for the Internet” sooner than many realize. Let that sink in for a bit.
While blowhards continue to hoot about short-term price adjustments from their gossipy newsperches, bespectacled modern Maghribis quietly probe the revolutionary potential of applied crypto-anarchy on GitHub and Tor. Let the squawkers squawk. Some will grow used the taste of crow; the rest will earn precious psychic profit starring in their recurring roles as the Cassandras of their self-styled epics. The longer the “Bitcoin is a bubble” bubble stays inflated, the more time coders will have to build creatively disruptive foundations in (relative) peace.
It doesn’t matter if Bitcoin crashes, it doesn’t matter if Bitcoin “fails.” What matters is that the Bitcoin protocol is rapidly enabling successful anarchic proofs-of-concept plucked right from the imaginative pages of the Machinery of Freedom. What matters is that we are observing, in real time, cryptographic applications providing working alternative institutions to those besot by the sickness of democracy. What matters is that these prototypes, once learned, can not easily be forgotten. Should this network go down, another will replace and improve upon its functions. Just try to get in on the ground floor with the right protocol.