Saturday, November 23, 2013

NISMO Stuff's Man of the Year 2013: Satoshi Nakamoto

The last "Man of the Year" I announced was back in '10 as since then I haven't felt I've encountered anyone or anything truly revolutionary or worthy of the designation.

My choice of Elon Musk at that time looks quite prescient now--he was just named Fortune Magazine's Businessman of the year for '13, Tesla has a market cap $15B, Solar City (another Musk founded entity) has a market cap of near $4B, SpaceX has exceeded all expectations and is on a path to bring people to Mars and beyond and Musk has brought to the forefront the idea of a superfast Hyperloop transportation system.  Musk's ideas and companies are truly transformative and will be impacting not just individuals but in fact the entire human race as we move forward.

You might not know the name of Satoshi Nakamoto yet but his creation will, if not itself, its derivatives, impact everyone in the immediate future.

No one knows who Nakamoto is or even if he is real.  He may be a fictional amalgam of a a number of people or may be an obscure mathematician at your local university.  Truth is, it doesn't matter.  Back in '08 "Nakamoto" published a paper on the internet titled "Bitcoin: A Peer-to-Peer Electronic Cash System".  Shortly thereafter the digital currency "Bitcoin" was created using a peer to peer network and outside the control of any government or regulatory agency.

Bitcoins are a bit hard to explain to people and, truth be told, I don't 100% understand their creation and details myself.  Some things that are simple to describe Bitcoins however are its anonymity (due to encryption techniques, Bitcoins can be bought, sold and used without the ability to track or identify the user or holder.  Bitcoins are also outside any governmental control, no financial authority can create more in order to pursue a fiscal policy.  They are a wonderful way to route around international sanctions, runaway inflation and capital controls.  Oh yeah, and they're a great way to buy drugs.

That's probably where you have heard of them--if you have.  The online marketplace "The Silk Road" was a forum in which you could exchange your BitCoins for drugs 100% anonymously.  Earlier this year the creator of The Silk Road was arrested and charged with various crimes (including trying to hire a hitman to kill people) but NONE of the thousands of individuals buying and selling drugs over the network have been arrested or charged...the nature of the currency prevents any attempts to ID the participants.

Right now the BitCoin is a niche product used by a VERY few people for typically shady or silly transactions--but this is rapidly changing.  This week alone the largest university in Cyprus announced it will begin accepting BitCoins as payment and Virgin Galactic (Richard Branson's space tourism company) accepted an individuals BitCoins for payment of a trip to space.  Additionally, more and more retailers are beginning to accept them--Foodler, OK Cupid, WordPress, etc. and even Gyft where you can buy giftcards to places like Amazon, Gamestop, Target and others with BitCoins.  Hell, there's even a BitCoin Black Friday event.

So what's the big deal with all of this?  The creation and acceptance of BitCoin takes the government's and any other Fiscal entity's, control over your wallet out of their hands.  No one can ID who has what money nor to whom its going or for what.  Imagine the US where the government has no ability to create, destroy, track or control wealth.  Or beyond that, imagine a single anonymous world currency.

The Feds are scared of it.  So scared that they aren't trying to control it at the moment.  At hearings in Washington this past week it was all lovey dovey between the politicians and BitCoin experts.  Why??  Because if the US gets in the way of the development and use of BitCoins the Chinese will dominate.  Already the largest BitCoin exchange is located in China.  Imagine that...China, home to the largest and most reliable source/exchange of the world's first completely decentralized monetary network.  Which is really what this comes down to...if the US doesn't lead the way in the development and acceptance of cryptocurrency the it will go underground and overseas and the US will lose any/all influence on what minimal controls they may be able to implement around it. 

I don't fully understand all the repercussions surrounding BitCoin, nor how its use will turn out, I do know that creating a currency that can't be printed/created or destroyed,can't see rules imposed upon it, is easy to transfer, easy to secure, verify and divide, is limited in supply, anonymous, easy and cheap to transfer, non Bank controlled and more widely accepted by the moment--will change the world.

1 comment:

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