The Bitcoin economy will most likely be the fastest growing economy ever seen. The growth rate will be astronomical, unlike anything the world has ever seen. Remember that the value of any currency is the value of the real goods and services produced by the people using that currency. This is true of the Dollars, Euro, Pounds, Yen, any national currency, or precious metals like gold and silver. Everyone (myself included) is focused on the price of Bitcoins. But the day to day price is not what is important in the long run. It is the adoption and use of Bitcoin to facilitate transactions of real goods and services. That is where the focus should be, not whether it is up today and down tomorrow against another national currency.
Here are some reason the growth of the Bitcoin economy will be unlike anything ever seen in human history:
- Anyone with an Internet connection can use Bitcoin either from a computer or a mobile device like a smartphone. Immediately. You can have a Bitcoin account literally within seconds and start receiving payments. There is no application or id required like opening a bank account. As of March 2013, there were 2.7 billion people with access to the Internet, up from 2.3 billion. That’s a growth rate of nearly 20%/year, with ~400 million new people getting Internet access each year. 2.7+ billion people is larger than any nation by far. Bitcoin has the potential to reach more people than any national currency ever could and in many countries where there are no banking services. Countries that are too poor to have computers can have basic smartphones with an Internet connection. They will have access to a functioning banking system for the first time, which is a life changing event. This is not just in 3rd world countries. Over 10 million households in America don’t have bank accounts!
- Bitcoin is the equivalent of interest free money; that is, there is no central bank charging interest for the use of its money. The people that use money from central banks pay this interest through taxes levied by their gov’t, who use part of its tax revenues to pay interest on the bonds bought by currency created by central banks. Because of this, the Bitcoin economy keeps all the value it generates, instead of that value being leaked away to the global banking system. At the moment, most countries don’t recognize Bitcoin as money, so this economy will be nearly tax free in for the near future.
- Bitcoin is free from manipulation and debasement from the world’s governments. The rate of inflation is controlled and known, and mathematically enforced through its algorithm. It provides people with a constant yardstick to measure and exchange value by, which we do not have today. The current global monetary system makes it impossible for the common person to judge value because the currency itself is being manipulated on a daily basis.
- The decentralized nature of Bitcoin makes it highly resistant to violence. No one “owns” the Bitcoin network. People can come and leave as they please. It can’t be shut down because there is nothing to shut down. There is no one to arrest, assassinate, or eliminate.
- Bitcoin is completely and truly private money. If someone wishes to send you Bitcoins or if you wish to send someone else Bitcoins, it is impossible for any 3rd party to stop any mutually agreed transactions. The ownership of Bitcoins is tied to the ownership of the cryptographic keys which can be generated at will by anyone, then hidden, encrypted, or even memorized. It is impossible for any 3rd party to confiscate your Bitcoins, unless they confiscate your private keys by force. For the first time in human history, any 2 people can conduct a mutually agreed transaction, no matter where they are located without regulation from a 3rd party.
- Bitcoin has near zero costs for transactions for any size. Whether you send a penny or a million dollars, the costs are the same. This makes microtransactions possible for the first time.
Bitcoin will enable near frictionless trade among 40%+ of the world’s population, across political boundaries and geographical distance for the first time in history. The implications of this can’t be overstated. The growth rate of the Bitcoin economy will be at levels never seen before.
