Open Letter to Mobile World Congress, Barcelona 2014
from Jon Matonis, Executive Director, Bitcoin Foundation
February 27, 2014
I have worked in the currency, payments, and cryptography business for over 20 years, at businesses including
Visa,
Sumitomo Bank,
VeriSign, and
Hushmail.
The
technological developments now occurring in peer-to-peer payments and
online distributed trust ledgers will shake the current financial system
to its core. Ultimately, this will be a good thing for society and,
therefore, it should not be feared or resisted.
Of course, I am speaking about the
bitcoin network and the bitcoin monetary unit which runs over that network.
If I had to describe bitcoin in just three words, I would say it is:
Money Without Government.
Alternatively, I could say bitcoin is
Survivable Digital Scarcity.
In just five short years, bitcoin has unequivocally demonstrated that
we don’t need kings to coin our money and we don’t need central banks
issuing debt-based paper notes and deciding what our money should be.
Money is anything we collectively determine it to be.
Ladies and gentlemen, the fiat emperor has no clothes. The illusion of
legal tender has been exposed.
Just like the untainted child in the Hans Christian Andersen
fairy tale,
some of us are beginning to notice. It’s not the illusion itself that
so offends our sensibilities, but more the notion that a competitive
illusion is not to be permitted.
If a free market illusion
voluntarily agreed to from the bottom up is so desperately feared, then
the protectors of the state-sanctioned illusion must not have the most
benevolent of motives in store for us.
At some level, all money is
an illusion that we share and as such we must be free to determine that
shared illusion from the bottom up, rather than have it dictated to us
from the top down. Even with
gold,
the most tangible of all monies, it is estimated that 95% of its value
is attributed to its illusory monetary exchange properties.
With a
bitcoin monetary unit, seigniorage becomes a thing of the past. And, as
users of the monetary unit, we are not insulted by the insidious
practice of having zeros added to the
left of the decimal point. Bitcoin is infinitely sub-dividable to the
right of the decimal point, as it should be.
Governments are not opposed to a shared illusion, they only want it to be
their shared illusion.
Just as the copyright world is being radically transformed by distributed file-sharing protocols like
BitTorrent,
the legal tender facade will be transformed by decentralized survivable
cryptocurrency because, in the end, legal tender is simply an unearned
copyright privilege over money.
Additionally, most governments are
sorely mistaken when it comes to bitcoin because, in order to thrive,
bitcoin requires only market-based legitimacy – not
government-sanctioned legitimacy. This is enormously frustrating for
them and it is something not witnessed on this scale before.
OK, now that we have placed bitcoin in that proper monetary context, we can turn our attention directly to mobile.
For some in the mobile payments space, the following will be difficult to hear.
Traditionally
plagued by a variety of barriers, mobile payments have seen lacklustre
adoption around the world. This is particularly true in the developed
economies, where a trio of competing interests breeds perpetual
infighting and stagnation.
The holy trifecta in mobile payments
includes governments, banks, and operators – each trying desperately to
secure their own piece of the coveted payments pie, exerting maximum
influence along the way. This, in my opinion, has strangled mobile
payments progress and adoption.
Fortunately, bitcoin and its decentralized network bypass these three quarrelling constituencies.
First,
the bitcoin monetary unit is nonpolitical in nature and it doesn’t
require an intermediary for issuance, authorization, clearing, and
settlement functions. Those are performed via the public block chain.
Second,
bank accounts and card networks are not required for clearing bitcoin
transactions, eliminating the need for those silly dongles and awkward
squares.
Third, since
bitcoin wallets
can run as standalone apps on smartphones utilizing QR codes,
specialized accounts with operators become unnecessary, as does
specialized hardware at the point of sale.
Guess what? These
point-to-point bitcoin-powered mobile payments are already happening
today. Furthermore, they are happening over your networks or at the very
least over optional Wi-Fi.
Bitcoin
is the quintessential disruptor, for not only does it disrupt
established primary-level players in the field of payments, like Visa,
MasterCard, and PayPal, but it elegantly disrupts the very nature of
monetary authority. Bitcoin is disruption
within disruption.
Money naturally operates like a virus and that makes bitcoin potently viral. It is viral
cubed,
in fact – money on the Internet with a network effect. A monetary unit
does not stop expanding until it runs into artificially delineated
boundaries or achieves widespread dominance.
An undisputed early advantage will be bestowed upon those that recognize and harness bitcoin’s transformative role in mobile.
It
is my sincere hope that we will never again have to sit through a
“disruption in payments” conference without hearing the phrase bitcoin.
Thank you.
Jon Matonis