In February, Hong Kong lawmakers called on authorities to ban Bitcoin after more than 25 investors were duped in a Bitcoin scam. Reuters reports that they may have been fleeced of [US] $387 million. That’s quite a scam—Bernie Madoff would be proud!
Coming from Hong Kong legislators, the request to ban a monetary instrument—rather than enhance security and education—is a bit surprising. After all, Hong Kong is a uniquely progressive society. Their dollar is not issued, printed or backed by the government (not the under the British mandate and not even under Chinese unification). Rather, it is issued and backed by 3 commercial banks, each one abiding by a strict reserve policy.
Ban, baby Ban
I love government bans! —especially edicts that try to prevent feral cats from mating or water from seeking its own level! It arguably produces a best-case event for popularizing a new technology, film, web-site, trend or behavior.
Sure, Bitcoin will be exploited by criminals — perhaps even at 5% of the rate that crooks exploit cash, checks or credit cards. I wonder if Hong Kong has banned those instruments?
Bitcoin is based on an elegant technology that is sometimes difficult to explain. But the results are easily understood. Whether you believe Bitcoin to be a currency, a threat to national sovereignty or a tool for criminals, it is simply a very inexpensive, efficient, quick and secure method of moving value from one party to another. That’s really all there is to it.
Of course, Bitcoin is new and it is decentralized. This means that there are a few things to be learned before common practices (and banking-analogous practices) can be made simple and safe for everyone. The Cryptocurrency Standards Association is working on it and so are a great many other programmers & organizations. Don’t bet against it! Bitcoin and the blockchain are one of those new-paradigm technologies that adds value, spreads quickly and is resistant to edict. In the beginning, Ebay, Google AdWords and hyperlinks seemed too difficult to be useful to the masses. It’s no different with Bitcoin. Adoption, tools, safety protocols and utter simplicity will make it a no brainer.
More importantly, Bitcoin does not present a threat to governments or nations, even if it begins to replace currency. (Many scholars think that this won’t happen). Governments can still tax citizens, float bonds, audit transactions, wage war and arrest bad guys — just as they did before and during the era of treasuries and central banks.
A major benefit of Bitcoin (at the very least) will add TENS of Billions of dollars to the economy. And not just supply-side dollars, but real skills and labor. That’s because Bitcoin saves 2~4% on most financial transactions. No fee for credit cards, wire transfers, checks and even commercial letters of credit. That’s why SWIFT is evaluating a switch to Bitcoin and it is why IBM is exploring the blockchain to move commercial funds all over the globe.
It doesn’t stop there. As Bitcoin adoption grows (even if only for debit transactions), a series of reactions will gradually follow. Peek with me into the future landscape of Bitcoin adoption. It’s easy to imagine. The vision is positive…What do you think?
• Related: Ellery’s articles about Bitcoin
Ellery is a founding member of CRYPSA, the Cryptocurrency Standards Association