“Many people see technology as the problem behind the so-called digital divide. Others see it as the solution. Technology is neither. It must operate in conjunction with business, economic, political and social system.”
That's what Carly Fiorina, former president of Hewlett-Packard, said at a conference in India for discussing how technology would change the future of industry. She realized that technology not only revolutionizes the way people do business and we are often better off for it, but that it also serves as a marker for social change. Consider the world economy, and how advanced telecommunications have evolved it into a truly global enterprise, whereas before it was merely a series of interlinked local economies. Social change is in the air again as libertarian ideas are more popular than ever, and a new technology is emerging which seems ideally suited to this brave new world of freedom and microchips.
This is Bitcoin. It is a completely digital currency “coined” entirely by private means. With the exception of some rare tokens, it exists primarily on the internet. And while its apparent value is the subject of often heated debate, few can deny its growing popularity. Business and vendors, sometimes very popular and trendy ones, now accept Bitcoin as payment in lieu of national fiat currencies, adding a certain degree of legitimacy to what might otherwise be a harebrained idea. But what exactly is Bitcoin, why do people like it, and how does it change anything?
Digital currencies have been around since at least 1996, but haven’t really started making an impact until now. Often called crypto-currencies, they provide alternatives to government-backed currencies, whose value and legitimacy have been called into question of late. They are digital, or crypto, because they exist only in a virtual capacity, being based on cryptography (hence the moniker) and as such, contain built-in security that makes them difficult to counterfeit. Unlike fictitious currencies used in online games, for example, they are completely redeemable for real world goods and services. Vendors are starting to jump onto the Bitcoin wagon and ATMs transacting in crypto-currency will enter the market in the near future, which helps Bitcoin gain traction. Now, the likelihood of being able to pay for groceries, gasoline, or even mortgages in Bitcoin seems more and more likely as people start using it more and more, even living off the currency for up to a week as part of a social experiment.
Bitcoin is becoming so popular that some are starting to think crypto-currencies will be the basis for all currencies in the future. CNet’s Molly Wood certainly seems to think so, claiming that Bitcoin is so influential that “it’s only a matter of time before [governments] replace paper with … digital money.”
Bitcoin is unique, though, because it is not created by governments and therefore cannot be easily inflated thanks to the finite number of units available. Governments cannot saturate financial markets with Bitcoin just because they think they need more money. This gives it an undeniable appeal to people Harvard economist Chris Robert describes as frustration with “the continuing financial turmoil and growing distrust in the global financial system.” While the U.S. government has made some recent attempts to crack down on Bitcoin transactions, the private currency seems to be unstoppable at this point.