Excerpted from Dan Robles:
“The first line of Satoshi Nakamoto’s white paper reads as follows: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” The goal is achieved quite simply by removing three frictions to the exchange of value among people.
The First Friction:
The Bitcoin protocol goes to great effort to foil the bad players and reward the good kids with game based incentives. The probable cost of an attack is greater than the likely benefit of attempting to do so. This wipes out the massive and hugely expensive vetting apparatus of verification, fraud investigators, audits, charge backs, legal claims, and courts.
The Second Friction:
With the judicial use of cryptography, the BCP wipes out a colossal industry of third party brokerage activity that withholds information about transactions ostensibly in the name of trust, fairness, and privacy.
The Bitcoin Protocol Analogy
The most obvious Bitcoin analog is to Gold; everyone gets this. Due to the economics of scarcity, miners have an incentive to expend resources in order to add more gold to circulation. However, as the scarce resource becomes more expensive to extract, the incentive shifts to transaction fees as reward for participating in the digital value exchange.
Transactions are abundant. There is potentially no limit to the amount of transactions that can take place. Participating in a transaction today does not remove future transactions from the account balance. In fact, transactions can be created by anyone at any time, and combined or subdivided in any number or ways.
The Third Friction:
The social analogy should be crystal clear, if not prophetic. As Consumption Capital becomes unsustainable, Abundance Capital will emerge as the primary generator of value creation between people. As such, the strategy for success in the BCP era, is not in the domain of tangible consumption, it is in the domain of intangible transactions. In other words, everything that we call “intangible” in the Era of Scarcity, becomes “tangible” in the Era of Abundance, and vice versa.
The New Tangibles:
The tangibles assets of the post BCP era are knowledge, innovation, and wisdom of people and communities of people as an abundant and recurring resource. The business methods of the post BCP era will require the promotion, exchange, and manifestation of knowledge, innovation, and wisdom among communities of people.
New Factors of Production:
Productivity is in the old economy meant increasing the amount of stuff that can be made a certain amount of time. In the new, productivity will involve maximizing the interaction of people within a certain amount of time, where the largest denomination is a natural lifetime. The World According to the BCP is the world that was meant to be, not the world that exists today.”
Dan you know I’m a great fan of your work. It is however, a little bit complicated for me to properly understand. I get the gist of what you’re saying and agree with what i think your point is. All i would add is that those of us (i include you here) who have spent many years developing our thoughts and ideas on system alternatives, need to find easier more immediate ways to articulate grand visions. Otherwise we won’t compete with the system as it stands now.
Really the challenge, as far as i can tell, isn’t a technical one (though tech is needed to facilitate a relatively friction free exchange mechanism) it’s more of a marketing one that needs to appeal more to the senses and less to the brain.
That’s my take on it anyhow.
I’m relatively confident that the way into people’s minds is through their souls or their hearts. Community, equality, love, peace, happiness and so on are all precious and spiritual gifts that should be shared with those that don’t possess them. I believe that that is the starting point for designing any new system that will make the world a better place. Until then, Bitcoin et al for me anyhow, are just noisy distractions.
Yours in respect, Mike.
I am very much in agreement with Mike…I too have dedicated years to the furtherment of complementary currency systems and although I just about grasp what the writer proposes it will not help me articulate my own explanations any better… My own project is actually doing what he suggests with phyisical notes and coins..but peoplet dont get it. I struggle with peoples slugishness to be open to understanding the avaolability of abundance… excuse spelling as I do not know how to spell check….
Well this one is actually not about money at all.
Dan Robles makes a distinction between Bitcoin, the money, and the Bitcoin Protocol, the basic invention on which this money is based.
The point is that the Bitcoin Protocol, the procedure which allows us to eliminate the central control authority, can be used for all kinds of uses that aren’t currency related. It is a mechanism where an agreement – any kind of agreement – can be recorded as authentic and be put in a verifiable distributed register. Conceivably you could use the protocol for voting without the need for vote counters, for instance.
Now as a currency, Bitcoin is not optimal. It is not greatly different from fiat money, except that it eliminates the bankers – no central authority needed.
The code for the Bitcoin protocol is open, any programmer can change some parameter or the way something is done or verified, and that new code can be released into the world for people to adopt. There are a lot of instances of this already … more than 50 alt coins, which are bitcoin clones, every one of them with some difference in features or method of calculation.
Bitcoin-the-money is better at being an object of investment than it is as a means of payment. This is because of built-in scarcity, which makes Bitcoin a darling of investors or people who like to play with money. Being scarce, there is speculative buying and selling, so there is instability of the value. Also a consequence of being scarce (there is a hard coded limit of coins ever to be created) is the rising value in time of Bitcoin-the-money.
Money reformers should definitely look at the features of the bitcoin clones and see if they find things they like, or get together with programmers to make a coin that behaves like they would like it to behave…
Bitcoin-the-protocol opens many doors that aren’t necessarily connected with money at all.