MadBitcoins Live held a Google Hangout after the digital currencies hearing in New York on Wednesday that included, among others, Andreas Antonopolous from Blockchain.info.
Antonopolous verbally annihilated one misconception about Bitcoin, and it’s worth taking a long look at his words. You can watch the video on YouTube, or you can read my transcription below. Emphasis my own.
There is this idea that Bitcoin as a currency acts as a direct competitor to national currencies, and what it does is offer people a way to migrate their financial activities from the mainstream currency as it stands today — US dollar here, euro in Europe, British pound sterling in England — to migrate those activities into the Bitcoin economy. And essentially what happens is it’s a zero-sum game. The Bitcoin economy grows from absorbing the economic activity from around it.
Oh, boy, is that wrong.
Because what’s happened in the meantime is that, in the middle of a stagnant economy overall, where you cannot get credit, and you cannot get commercial loans to start businesses, and you cannot get funding because innovation is unprofitable.
Because it is so much better to sit on a stream of money and do rent-seeking behavior, and it’s so much more profitable to attach yourself to a government contract and build bombs so that they can go kill people, all of these activities are basically draining innovation out of the economy and draining any incentive for any entrepreneur.
When it’s far more profitable to cheat and steal and extract rent-seeking money from an economic flow, what that does is it kills innovation.
So, let’s see what happens. You have a stagnant economy, then in the middle of it you have this pool of liquidity. And over time this little pool of liquidity created people who were relatively wealthy in Bitcoin terms, and that created liquidity in credit. These people then turn around and invested their new-found wealth, which was generated through this new currency back into startups and companies that went out and hired people. And these people started making money in Bitcoin and started investing that money back into companies.
What we have here is not Bitcoin just absorbing the economy through merchant activities and retail, which has been the primary focus. What we have here is a completely standalone economy that is feeding itself by creating its own liquidity ecosystem that is generating innovation and investments in an entirely new industry.
If we look back, what happened on the Internet was not that the Internet took the international long-distance telephony market and absorbed it until the Internet was equal to it. That was the beginning. But eventually, the Internet became its own economy. And as its own economy, it dwarfed all the economies it absorbed and started generating far more economic activity from within than it did by absorbing external industries.
Bitcoin is on that path.
Bitcoin is now generating a vibrant, innovation-based, technology-based economy that is creating thousands of jobs since the middle of 2013 and is creating robust economic activity and growth on its own. In its own right. With its own currency. With its own liquidity. Through its own investors, who had the vision and foresight to risk their money in the beginning and got rewarded and turned around and invested it into productive activities.
It is a little jewel of a free market in a sea of stagnation that is generating thousands of jobs. And people are missing the point.
Bitcoin will not absorb the rest of the economy. That’s not what’s important. Bitcoin will give people a choice to join a new economy. An economy that’s vibrant, that’s young, that’s not corrupted and that is brimming with innovation in a sea of complete stagnation.
You can work for the murderers.
You can work for the thieves.
You can work for the torturers.
Or you can work for the innovators.