It would be fair to say that most people have only tacit knowledge of Bitcoin. They might have heard of it but few know exactly what it is or how much it is worth. Those who might be more in tune with current events might have come across some interesting headlines that have raised eyebrows. For instance, back in December 2013, an auto dealership in Newport Beach, California accepted bitcoins for the purchase of a Tesla Model S. However, more recent events have not been so positive. In February of this year, Mt. Gox, a large Bitcoin exchange based in Tokyo shut down its services, suspended operations, and declared a form of bankruptcy. The news media has reported that over $450 million in bitcoin currency has vanished. Furthermore, this month in March, young CEO, Autumn Radtke, of large Bitcoin exchange First Meta was reported to have committed suicide. To discover more, Rodrick “The Tampanian” Colbert interviews Tampa-based technology and Bitcoin expert, Matt Branton about this fascinating new world of alternative, digital, or “virtual” currency.
Colbert: First of all, what can you tell us about yourself and your interest in Bitcoins?
Branton: My name is Matt Branton. I am the founder of Coinlock.com, a Bitcoin micro-payment platform for files. Our aim is to make it easy for anyone to sell anything online, regardless of where they are or their access to traditional banking infrastructure. In another life, I was heavily involved in trading systems, and the technologies surrounding Forex and derivative exchanges
Colbert: How do you feel about the entire concept of “alternative currencies”? Do you feel that they will ever replace currencies tied to national governments?
Branton: I think digital currencies are a natural complement to our existing system, and can greatly expand the economic reach and fluidity of our economy. I see the process more as an augmentation rather than a replacement.
Colbert: Some concerns many have about “virtual or digital” currencies are their lack of knowing their intrinsic value. As they gain in popularity, will money as a specific value ever be a concern? Or will “value” always be something more psychological?
Branton: Nothing has intrinsic value. We as a society agree that something has value. Sometimes, that value is backed by scarcity and resources necessary for acquisition like gold, other times by force and labor output like the US Dollar. Digital currencies have value if people believe they do, and use them to conduct real commerce.
Colbert: What can you tell us about the mysterious origins of Bitcoin?
Branton: Bitcoin was in large part developed and conceptualized by the pseudonymous Satoshi Nakamoto; an individual with a very strong understanding of computer science, cryptography, and networking whose origins are largely unknown. That initial working prototype has been expanded on by an international team of computer scientists who have vastly improved the model. It was built in the same way that Linux (the most popular operating system in the world) was created, on an open source model.
Colbert: My understanding is that Bitcoin is something related to computer science. Can you explain this to a novice?
Branton: I’m not sure the theoretical underpinnings are that important for the novice. Any more than the specifics of how a computer really works, or why the web operates the way it does. Bitcoin is a protocol for payments built on top of the Internet in the same way that the Web is a protocol built for conveying information. It requires significant expertise to understand, and how it works is much less important than
that it does.
Colbert: You are the Founder and CEO of Coinlock, Inc. How does it operate in the Bitcoin world?
Branton: Coinlock.com is a micro-payments platform for files. That means you can take any file you own, upload it into our system, enter a Bitcoin address (which is like a bank account number on the network) and instantly sell your content. You just drop the link in your blog or web site, and now you can make some Bitcoin. We are trying to make this process as simple as possible, and reduce the friction in e-commerce. You don’t need to be a programmer, understand e-commerce sites, or pay for an expensive integration on your website to be able to sell stuff and make Bitcoin.
Colbert: Are you concerned or excited by the new industries rising from the Bitcoin world?
Branton: I think new industries are by definition exciting. Bitcoin and other digital currencies are making the world a smaller place, and it is vastly reducing the friction in doing international business. For the first time in human history, you can potentially pay anyone else on the planet instantly, and they can pay you. This is a revolution in payment technology.
Colbert: How do you feel about the latest scandals related to Mt. Gox and the suicide of the First Meta Bitcoin exchange CEO, Autumn Radtke?
Branton: I feel bad for people who lost their money at Mt. Gox. I think the media has gone far to conflate Bitcoin with Mt. Gox, which is a bit like saying a bank failure shakes your belief in the US Dollar. The two are totally separate. They ran a business extremely poorly, and people who were speculating on that market got burned. The vast majority of people using Bitcoin weren’t using Mt. Gox’s services. With regard to Autumn Radtke, my interactions with her were limited. My understanding was that she was particularly gifted and driven, and people can drive themselves to some very dark places. I don’t think her alleged suicide has anything to do with Bitcoin.
Colbert: How do you feel about Bitcoin solely as an investment?
Branton: Bitcoin is a highly speculative endeavor. It could make you rich, or it could make you poor. I am not qualified or certified to give investment advice and this should not be construed as such, but generally speaking, you should choose to invest in assets within your risk tolerance. If you can’t afford to lose the money, don’t throw it into Bitcoin, lotto tickets, or crude oil futures. My interest in Bitcoin revolves around its use as a transfer of value, and the revolutionary services it enables. Investing in Bitcoin companies and services seems like a much wiser use of capital.
Colbert: Finally, what else about Bitcoin should readers know?
Branton: Readers should realize that Bitcoin could save them a lot of money. Credit card companies suck out almost 120 billion dollars from the US economy every year in transaction fees. That is a silent 3% tax on almost everything American consumers buy. Bitcoin and digital currencies like it, if widely adopted, could cut 3+% off every transaction in the US. If a politician were to guarantee you a 3% flat drop across the board, who wouldn’t vote for them? Don’t let Bitcoin get squashed by media conglomerates and credit card lobbyists. It is your money and you deserve to keep as much of it as possible. Cutting out the middleman and embracing new technology could reinvigorate our economy.