Bitcoin and the future

People often discount the future because they think the future is unknowable. You cannot learn things you do not know. But that is a fallacy.

The future is knowable in exactly the same way as next week’s appointment in your calendar or next week’s weather forecast. They can be known as a set of possibilities, as plausible alternative futures, any one of which has a significant chance of occurring.

Futurists survey and explore emerging trends, thus opening up a wider range of plausible futures so they can be considered part of strategic development. They help people expand their narrow focus on one future to a broader range of other possibilities, thus opening up new opportunities or allowing for the mitigation of potential risks.

As an example, one emerging trend to watch is Bitcoin. Beyond the hype of big rises and crashes in the price of this currency, and the speculative stories that have accompanied it, is there possibly something far more fundamental going on in this space? Could it be that the currency is not the main thing – the main thing is the underlying platform and what it is capable of?

Consider the internet, which transformed the telecommunication model and became a permissionless innovation platform. Instead of having to wait for existing telecommunication companies to adapt their legacy systems, the internet platform allowed anyone to build applications like Skype, FaceTime and Hangouts to work as long as users on both ends use the same software.

The internet platform allowed for the decentralising of power. End users could decide if they wanted to participate and it created amazing innovation that saw the development of new business models and, of course, the disruption of many others.

People think of Bitcoin as a currency of sorts. This is rather like regarding the internet as a substitute for, and not a quantum leap beyond, previous communication technologies.On a deeper level it provides a permissionless platform that may become a transport layer for finance, thus bypassing the financial institutions and transforming the way commerce is conducted.

Permissionless innovation means more innovation, which means it could bypass how financial transactions are administered today. For example, assurance contracts, in which people agree to fund a project conditional upon others contributing a specified sum, can be coded in Bitcoin. It could be used for micropayments, allowing continuous payments to be made based on certain criteria similar to loan contracts. It could also become a notary service, providing proof that a given document existed at a particular time and date.

Bitcoin has the potential to become a new transport layer for finance that allows decentralised, disruptive, permissionless development of applications.

If this was to occur,  the banks and governments can kiss their concentrated power goodbye. Not only will it no longer be possible to censor simple transactions, such as donations to Wikileaks, it won’t be possible to ban or regulate certain classes of transactions and contracts, such as betting markets and peer-to-peer lending. The power to decide whether to engage in these activities will be redistributed to ordinary people.

Bitcoin is not just currency but programmable money that has the potential to disrupt the financial system, much like the internet has done with telecommunication companies.

Professor Jim Dator once said: “Any useful statement about the future should appear to be ridiculous” – a statement that may sum up your thinking about Bitcoin.