BitCoin: Money is electrons, as long as you accept it

BitCoin: Money is electrons, as long as you accept it

By Bob Travica

Recently, some advocates of BitCoin were arrested in the US. Not long ago, BitCoin was banned in China. These events again swayed public attention to BitCoin, and interesting international phenomenon that was born in 2009.

BitCoin is a form of digital currency, created in the open source community (programmers who make their software available in the form of source code and often free). It is a form of money that is used as a means of exchange among those who voluntarily accept it. There is no mint authority, no specific country issuing the money, no banks, no coins (although there could be plastic pieces imitating coins but hiding digital circuitry inside). And there is no money exchanging pocket, just shuffling of encrypted messages that specify transfer of BitCoin form one owner to another.

There are many problems with BitCoin, such as its exchange rate with regular currencies, large fluctuations in value, its geographical coverage, and, not the least important - BitCoin is sometimes used for irregular trade like narcotics. Advocates of BitCoin and other digital currencies point out that alternative means of exchanges serve as a rescue from over-powering banks. The argument goes, if a particular community agrees on its currency and it does the job of facilitating legal trade, who is to say that digital currency is inappropriate?

The bigger picture behind this story is digital format of money. In the 1950s, some visionaries asserted that money was going to be electronic. Bankers laughed. Today, however, most of banking transpires in the form of transferring debit and credit figures electronically.

Money is essentially a social contract between parties accepting a certain means of payment as legitimate (normal). They also accept that the given money is an appropriate meter of economic value of goods and services traded. As long as the contract exists, it doesn’t matter if the money is paper, metal, electronic numbers, or nearly anything to which imagination can stretch. It is important though that the particular format cannot be easily forged.

In the past, money itself had economic value; e.g., sheep, edible plants, and then gold and other precious metals. While gold survived as a sort of money, it is impractical to use it in regular trade due to wear, robbery, impossibility of measuring smaller value, etc. Up until early 1970s, paper money was backed by gold reserves in national central banks. After abandoning the gold standard, limits to digital money definitely disappeared.

Clock: Update thinking with technology progress

Clock: Update thinking with technology progress

By Bob Travica

Commando Delta speaking in his RF device:

- Delta to Alpha, a sniper 3 o’clock, ten-four.

Commando Alpha speaking back in his RF device:

- Copy that.

To make use of this potentially life-saving message, Alpha needs to be facing the same direction as Delta (Alpha must see what direction Delta faces), and then to concentrate on the perpendicular direction, 90 degrees to the right. In other words, Delta has to visualize a good old clock. Even if Delta actually wears a watch with a numeric dial.

But Delta is trained to make the visualization of a fading technology in order to orient himself in physical space.

Doug is a teenager who never wore a watch with the classical dial. Wait, he’s never worn any watch, as his cell phone tells time. Doug wants to learn to waltz for the upcoming wedding of his older sister Anna. She loves it and requested that Doug better be ready to waltz with her at least once. Anna is sure she can teach Doug to waltz in no time.

“Doug, it’s like walking in three steps, right, left, right, and then same with the opposite footwork. All the time you keep turning clock-wise…” explains Anna. “Got the three steps part,” fires back her brother. “But what do you mean to turn clock-wise?” “You know, move in the direction of the hands on a clock.” “Daaa?” stares Doug back at his frustrated sister. “Oh, Doug, it’s just the vocabulary we use for dance instruction. Don’t be such a moron, you’ve got to get it!”

Technologies change faster than our knowledge of technology metaphors. Some pieces of knowledge appear as if they are cut in stone of institutions that resist change. “Three o’clock” is same as saying “watch East” or “90 degrees to the right.” And “turning clockwise” is same as instructing “turn around the right shoulder.”