A recent post on Reddit talked about the experience of one redditor who lost his wallet while travelling in Seattle. Fortunately for him, he didn’t have to throw himself on the mercy of his friends there, but just by borrowing a friend’s device, he was able to access a Bitcoin wallet and get the funds he needed to continue his trip. At present this is kind of an exceptional story: this person had the knowledge and ability to get the bitcoins he needed, and he was in a city with enough Bitcoin accepting establishments to get by. The fact that he could do it, though, shows how much Bitcoin has developed in its short history.
Bitcoin adoption is progressing, but for many, it seems to be at a snail’s pace, which is frustrating for those who think Bitcoin is like the early Internet and are waiting for the massive spike in usage. Rather than the Internet, though, it might be better to compare it to the rise of credit cards, which are a lot closer to Bitcoin in what they do.
Charg-It, the first recognizable credit card was created in 1946 by John Biggins of the Flatbush National Bank. This was a bit more like a community card, though, since it could only be used in the local area. Before Biggins’ Charg-It, there were only chits, cards, or coins for use by those wealthy enough to rate them in department stores and luxury shops.
It wasn’t until American Express began issuing plastic cards in 1959 that mass adoption really began to take off. These cards filled a need: Banking laws at the time prevented banks from operating across state lines meaning that it could be difficult for people travelling out-of-state to pay for things without carrying large sums of cash. Now you could travel anywhere without worrying about money, so their popularity grew.
Credit cards have grown to be near-ubiquitous in American life partly because of the real need they filled, but also because credit card associations had the money and motivation to package and present credit cards to both businesses and consumers. The more consumers that wanted to use credit cards, the more pressure businesses felt to accept them; and the more businesses that accepted credit cards, the more consumers got interested in the benefits they offered. It was a virtuous circle that drove adoption.
One man, State Senator Branden Petersen of Minnesota, wants to take the model of credit card adoption and apply it to Bitcoin. A republican with a history of thinking and voting out-of-step with the party when it seemed to him that out-of-step is what’s called for, Senator Petersen has decided to create the first, non-profit, Bitcoin promotional group: yesbitcoin. This group, Senator Petersen hopes, will do for Bitcoin what the credit card processing organization did for credit cards in the 60s and 70s. (To see Senator Petersen in action in the Minnesota Senate, click his picture to the right.)
Credit cards were a real boon to people when they first emerged because they made life easier. Now, they have become a near necessity for life, and that makes them as much a problem as a benefit. Just to name a few of the things I worry about with my own cards are the APR, my credit score, high fees, overly complicated terms, hacked card readers, identity theft, and so on. The fact of the matter is that credit cards were meant to be a convenience and a choice, not a necessity. Now that they are a necessity, we need something more suited to the Internet age, and that’s where yesbitcoin comes in.
I was able to get Senator Petersen to answer a few questions about himself and yesbitcoin:
In your press release you state that you want yesbitcoin to follow the path blazed by the credit card industry. Of course, that promotional work was done by the credit card industry itself. Why do you think that’s the right model for your non-profit?
There are clear similarities between the adoption of consumer credit cards and bitcoin use. Obviously, they both stepped into the marketplace up against incumbent “stores of value” as well as an established payment infrastructure. Both require/required education of the consumer as well as some infrastructure improvements. A key difference between the two is the fact that the traditional financial services companies had a proprietary interest in their communications work. If people adopted their method/services, they stood to benefit in terms of earnings. Bitcoin is different. There is no sole proprietor of Bitcoin and any education and/or advocacy done on its behalf impacts the entire marketplace. This presents a real “return on investment” problem for any entity that decides to engage in this activity on their own. Given Bitcoin’s lack of mainstream consumer understanding, it is not reasonable to think that a single entity can scale communications in a way that makes sense for their bottom line.
So, in your day job, you’re a state senator for the Minnesota 35th district. What got you into politics?
In short, I got into politics because I wanted to help direct my state towards policies that increased individual freedom. Generally, it is the same idea that drew me toward Bitcoin.
What have you learned about government works from your experience in the legislature?
One of the biggest things I learned about government was that the people that work inside of it are driven by many of the same things as everyone else. Self-interest exists in government just as it does in the marketplace. The problem is that when those who are self-interested also have the power to act in a way that affects everybody in your state/country, it doesn’t result in the right outcomes. The beauty of the marketplace is that self-interested actions, and failures, are confined to those that choose to do business with that entity. In government, given its centralized nature, we all are impacted by decisions that are made for the wrong reasons. These ill-advised decisions are made by all parties, but most of the time for the same self-interested reasons.
How did you first learn about Bitcoin and what prompted you to start a Bitcoin advocacy organization?
I can’t say the exact day that I heard about Bitcoin. I know that it was through social media in 2012.
As an advocate for Bitcoin, I want to do everything that I can to help spread the message and move towards mainstream adoption. The ability of Bitcoin to democratize the financial system and empower billions of people worldwide is transformational. In one’s lifetime, you are given a handful of opportunities to be a part of something that can truly change the world for the better. I believe that Bitcoin is one of those things.
As yesbitcoin is a business oriented group focusing on promoting the fledgling currency to merchants and consumers, what do you think that the biggest advantages to business owners and shoppers are if they use Bitcoin?
The ability for merchants to save on financial service charges is a clear advantage. In some cases, these charges are 1/5th or less of what they would be with a traditional service.
Of course, Bitcoin is a fairly technical innovation and there have been a lot of highly publicized scams. Do you think that Bitcoin is safe enough for people who may not be as technically knowledgeable to use?
With today’s wallet technology available, you don’t have to have technical knowledge about Bitcoin/bitcoin in order to use it. In terms of safety, I would say that there isn’t anything different about bitcoin security than what are already best practices in password/PIN protection on personal devices and personal account numbers.
In terms of the high profile scams, I think that part of that is growing pains for Bitcoin. I think we are in better position today than we ever have been. It is worth pointing out that there were multiple high-profile security breaches compromising tens of million of account numbers with U.S. retailers alone during this same time. Even more interesting, you could argue that these “traditional” security breaches would have actually been prevented had they been bitcoin-based transactions.
I actually think that security will need to become one of the most well-known brand assets of Bitcoin for it to be adopted. Traditional financial services companies know this. See American Express’ “More Secure World” campaign.
Lastly, funding of the ongoing development of the Bitcoin protocol is essential. Everyone who cares about Bitcoin should read the CoinDesk article that came out recently from Mike Hearn. The work he is proposing to do is vital, and I think that Bitcoin Foundation is well aware of this. They identify it as a risk factor in their “Removing Impediments to Bitcoin’s Success” report release this spring.
As a state senator, how do you think the state should handle things like taxes and regulation for Bitcoin?
Do no harm. I would actually like to see governments begin to use merchant services to accept bitcoin for taxes and fees. I think that this sort of government acceptance would drive a lot of helpful rulemaking and adoption throughout their jurisdiction.
yesbitcoin is billed as being global. What kind of partnerships are you developing to have a global impact?
We haven’t launched yet. Obviously, we are biting off a lot with our mission. As with any organization, our launch date certain is heavily dependent on the successful completion of our first fundraising round. We’ll have more news on this soon.
What’s your elevator pitch for Bitcoin to someone who doesn’t know much about it?
“How would you like to transact instantly with anyone in the world without giving up your account information?” Unless I somehow knew they were a merchant, in which case my pitch is obvious.
By Mark Norton [email protected]