Bitcoin is a very new technology, even though the concept underlying it, has been around for several decades. The issue of double spending is solved, and this means that you can use to control cash account electronic certificate and be sure that while you’re controlling him, no one else can spend that certificate. This is an unprecedented paradigm shift, the consequences of which are still not fully understood and for which you have not yet created the tools that allow you to fully use all the advantages of this new idea.
When it comes to business development, architecture, it turns out that the solution to this problem requires some new thinking. The first email providers misunderstood they sell the service for many years. So it is with Bitcoin: in order to fully realize its potential, we need to develop a new and correct way of thinking about it.
Original Hotmail interface
Hotmail used familiar technologies (the browser and email) to create the best way to access e-mail and deliver it; the idea of using a mail client such as Outlook Express has been replaced by web interfaces and messages «in the cloud» that gives a lot of advantages in comparison with the individual customer, keeping the mail locally on your hard drive.
Bitcoin, which will change the way you wire the money, should be perceived as an independent phenomenon and not just another form of electronic money. To accept Bitcoin as money in the same way is absurd, and to perceive email as another way to send letters by regular mail; email not only replaces the old mail, but also completely changes the way people send and receive any messages. It’s not just a one-dimensional replacement, or improvement has long been an existing idea or service.
As I said, Bitcoin is not money, it’s Protocol. Treating him this way based on the right prerequisites, you can begin to gradually enter the Bitcoin in the correct context that will allow you to make more rational assumptions about what services based on it can benefit.
Each element of Bitcoin is the text. It’s always text and never ceases to be. It is a fact. And as the text, he is protected by the provisions on freedom of expression the constitutions of civilized countries and has a guaranteed and irrevocable rights.
If Bitcoin is a Protocol, not money, the creation of trade cryptocurrency exchanges that mimic Forex brokers, stock and commodity exchanges, is not the only method of determining its price. You would not have to organize commercial exchange of emails to determine the cost of email services. So it is with Bitcoin.
Continuing this analogy, when you open in your Gmail account window and type in it the text that you write «letter». Then you hit «send» and the data is sent through your ISP, through the Internet, the ISP of the recipient, and then displays on the monitor the final destination. The same is true for Bitcoin: you introduce money via a service from one end and send bitcoins to the recipient, without an intermediary handling the transfer. Once Bitcoin will do its work by moving mortgaged your value for the email address of the recipient located anywhere in the world, it is necessary to «read», that is, bring back the money – about the same as when your letter is displayed on the monitor of the recipient.
In the event the e-mail after you have read this letter and the transfer of information has taken place, it remains for you nothing more than record the fact of transmission of information, and you archive the entry. Bitcoin leads for you this archival record in the blockchain, and good service will keep you extended information about committed transactions and locally, but what you need as the recipient is services or services, not bitcoins themselves.
The true nature of Bitcoin is to serve as an instant payment method (though not being a money) available anywhere in the world. This is not an investment, and storing bitcoins in the hope that they will rise in price is all the same what to store old e-mails or PDF in the hope that in the future they will have some additional value. This makes no sense. Of course, you can hold the bitcoins and watch them grow in value (and they will), but then you need to have strong enough nerves to safely treat episodes of sharp depreciation, which on the way to the adoption of Bitcoin will be many more. Companies that need to store bitcoins, may also disturb the value of BTC, if their business models are open and are exposed to the market. Company with a closed model, you have full control, and they do not need to worry about exchange rates. They can build the process to move unlimited amounts of Fiat with a very small amount of bitcoins.
Even with the impossibility of double spending and the uniqueness of each bitcoin, they have no intrinsic value, unlike a book or any physical object. They can’t become more valuable. Misguided approach to spread Bitcoin, because Bitcoin behaves like money because it can’t be spent twice. For misperceptions about the true nature of Bitcoin has already become hard to see his double nature is both digital and avoid double spending of tool.
The Candy Razzles. If they are chewed, they turn into chewing gum. Before you started to chew than they are: candy or gum?
Bitcoin is a digital product, possessing all the qualities of information that make it not scarce. He occupies a special place somewhere between the goods and services of the physical world and infinitely rich digital world of information that belongs exclusively to the digital world, but it has characteristics of both worlds. That is why Bitcoin has been misunderstood by a wide range of people and why a new approach is needed to design a business around it.
All this partly explains why the price of BTC on the exchanges has actually value for the consumer. Even if the price of BTC will fall to 1 ¢, this circumstance does not affect the amount of money that introduces the sender or the recipient displays. If immediately after the transfer you exchange bitcoins for goods or Fiat currency, then get on the other end the same amount that was sent, regardless of how many at that time BTC was worth.
Think about it this way: suppose you want to send someone a large text file. You can either send it in its original form, or compress it to zip. The size of the compressed text file can be on 87% smaller than the original. Transponer this idea in Bitcoin, the compression ratio is the exchange rate of BTC. If BTC is worth $ 100 and you want to buy something from someone in India for $ 100, to send this amount to India, you need to buy 1 BTC. If BTC is worth 1 ¢, then send 100 $ you will need a 10 000 BTC. This corresponds to compression ratios of 1:1 and 10,000:1 respectively.
You send the same 100 $, no matter whether you are using for that is 10 000 or 1 BTC. Bitcoin price has nothing to do with the transmitted value, as well as zip file «no case» to what information is contained within them. And Bitcoin, and zip just the protocols do their job. As long as the price of BTC are not equal to zero, it will be used as well and will be useful to the same extent as if they were very «expensive».
With this in mind it becomes clear that in order for Bitcoin functioned in accordance with its true nature, we need a new services for faster and easy conversion of money to Bitcoin and back.
The business model of existing exchanges do not correspond to the true nature of Bitcoin. They use the model stock, currency and commodity exchanges of the twentieth century, just transferring it to Bitcoin. Interact with these exchanges and non-trivial for the average user may present a frightening prospect. In some cases, to wait for the transfer to Fiat currency when withdrawing them from your bitcoin-wallet account for up to seven days. Though in that is no fault of the exchanges, this is a very real impediment to Bitcoin could be used according to its nature and unleash its potential.
Imagine this situation: you receive email from other side of the world and see in your browser a notification in the form of a line with the subject. Then you send your ISP a request to deliver this letter, then have to wait seven days until it is physically delivered to your Inbox.
A letter for you, baby!
It is a perfect absurdity, and yet, that is what is happening with bitcoin, and without any technical reasons.
It is clear that we need to rethink created around Bitcoin services, and how we understand its very nature. Rethinking services is normally part of the business, and we should expect that business models will fail, and the first members of the new markets to be pushed to the sidelines as the market development and the continual appearance of new iterations.
With this in mind, focus on the exchange rate of bitcoin, using unsuitable for this new software product business model is how to place the detector of breathing methane Canary in a mine full of people (breathable oxygen). Bird dies while in the air there is nothing wrong, the miners quickly evacuated, throwing gold veins, thinking that all it’s going to explode, when in fact no problem.
The activity of day traders, speculating on the bitcoin exchange rate causes price fluctuations. It is an artificial signal that has nothing to do with real demand for bitcoin and its turnover as a tool to facilitate trade.
Bitcoin and the underlying his ideas has come to stay. With the growing number of people who will install and use the program clients – as in the case of Hotmail – Bitcoin eventually reaches a critical mass, and then exponentially spread across the Internet. When this happens, the right business models will arise spontaneously, they just become obvious, as well as Hotmail, Gmail, Facebook, cell phones and instant messaging have long been made to seem completely natural.
But it will happen in the future. I think now quite a few people are willing to speculate on the value of bitcoin because, although it may be even advantageous, much more money can be earned by providing excellent services using all the advantages of Bitcoin.
One thing is certain: the speed will be crucial for any future business models based on Bitcoin. Successful startups will be the ones that will be able to provide instant satisfaction to all participants of the transaction. Even though the price volatility of bitcoin will inevitably stabilize, because in itself it does not make sense, an instant convert in money or goods will remain in demand in any business, built around Bitcoin.
The needs of bitcoin businesses create a lot of new challenges from the point of view of performance, security and new thinking. In the process of overcoming these challenges would result in new practices and software on the topic which now we can dream up.
Finally, when the Fiat currency will be no more, and the chaotic transition zone between Fiat and Bitcoin will be eliminated, then all prices will be already nominated in bitcoins and the volatility is simply no space because the buying and selling of something will be used only bitcoins. If you know chemistry, it will be like to achieve the balance reagents: you can shake them to mix after completion of the reaction will remain inert product. Now, against the amount of Fiat currency in the world, a relatively small capitalization of Bitcoin can expand and contract very quickly and in a large range. It can grow to unimaginable for many, and then again to decrease. As it will become more and accumulate mass (the price Vietnam terms), these fluctuations will become less and less. Bitcoin will remain the same – that its users post some numbers as signals and react to them.