So, why are people messing around with Bitcoin? The technology is complicated, you cannot hold a Bitcoin in your hand or drop it on your foot. It’s frightening to use, and unforgiving if you mess up. The user assumes complete responsibility for all their transactions, along with the proper storage, management, and security of all the funds. This is not simple stuff, so why are people so interested across so many geographies? Why all the effort? What is this worldwide market telling us?
After reading this great Medium piece by Miguel Cuneta, Don’t Fall for the Hype — (a must read by the way) I spent a day digging into the St. Louis Federal Reserve, FRED, database. The mission was to apply some basic Economic tools and analysis to better understanding what Bitcoin is telling us. The result was, that after a several hours of data tables, first quadrant graphs, multiple regression and econometric tests was that the Bitcoin story isn’t in the math.
Banks, financial institutions and governments play a significant role in everyone’s lives. Like any human organization, these institutions are subject to error; they make mistakes and things turn out poorly. The challenge comes when we ask, who pays the price when these mistakes? Did any bankers or executive managers of rating agencies go to jail after 2008? No.
Financial institutions have been protected by a lack of meaningful alternatives to the services they provide. In many ways, all a bank needed is to be better than cash under a mattress or gold in a safe, that’s it. The banking business model is to not rock the boat, manage the regulations and all will be well. When you can, try to be a little nicer to your customers then the next guy and you are good-to-go.
Bitcoin introduces choice and a gate through which some can exercise options, use alternatives and even escape. Bitcoin is demonstrating by its use, is that the existing financial organizations are too expensive, too slow, too inefficient and wasteful of your money. Bitcoin demonstrates that most banking services can be provided by you, safely, quickly and cheaply. People have been given a alternative and they’re taking it, risks and all. Bitcoin requires people to invest time to wrap their head around its technology, and when they do they discover freedom, security, flexibility and safety from inflation. They find Bitcoin more than worthy of the risk and added responsibility required for its use.
This is not going away.
