We need to talk about Bitcoin

Sleep eludes me.

It may be the 35 Celsius of Athenian weather that keeps me sweating at nights. Fundamentally though it’s something else, something bigger.

That something is Bitcoin.

Bitcoin fascinates, frustrates, and scares me in equal measure.

What frustrates me is that it took me too many years to wake up to its significance. The first bitcoin was mined in 2009 (bitcoin, with small “b”, is the coin that runs on the Bitcoin protocol, capital “B”). It then embarked into a sensational rollercoaster of pumps and dumps, crashes and thefts, drugs, crime and arrests. There was sex and violence too, I’m sure.

That was not a good time to jump aboard.

There came a point in 2014, however, when Bitcoin matured into something solid. Major VCs (Andreessen Horowitz, Union Square Ventures, et cetera) and some smart people (Naval Ravikant, Balaji Srinivasan, et cetera) were now backing this protocol. Heck, even Richard Branson and Bill Gates shouted from the rooftops about it.

Where was I when this happened?

In his infamous rule books Richard Templar advises that, in all matters relating to wealth, you should “Keep It Under Your Hat”. Bitcoin is not Games of Throne. Bitcoin is not Brexit or Trump. You won’t see it in your Instagram feed. Don’t expect to just “hear” about cryptocurrencies.

Interesting opportunities wouldn’t be that interesting if average folk chit-chatted about them at your local pub (In fact that’s a firm indicator the terrain is toxic and it’s time to bail).

Bitcoin “happens” behind the thick cryptographic walls of obscurity. Secure end-to-end communications between anonymous sock-puppets dictate much of what’s going on in this space. Whoever created Bitcoin, sits on top of millions of coins and yet nobody knows who that billionaire is.

It’s easy not to “know” how important Bitcoin is.

That’s my excuse, that’s what helps me sleep at nights. It is not my fault I didn’t embrace Bitcoin earlier (it is). But even if I’d known just how important Bitcoin is, how much could I have done with that knowledge?

Buying bitcoins is not easy

Unless someone pays you in coin, you will need to register with an exchange and use fiat currency.

Setting up an account with Coinbase took me close to a month. Getting them to verify my passport and photo uploads took them several weeks. Then I had to convert British Pounds to Euros. Banks operate their own exchange rates, plus they charge a fee on top. The amount of money you lose right there is significant (when I tried back in May, TransferWise refused to send money to Coinbase as it was “beyond their risk appetite”).

Storing bitcoins is not easy

Once you buy it, you then have to store your digital currency. What do you mean store? Why don’t you just leave them on the exchange?

There are two reasons that’s not a good idea.

The obvious one is that your funds may disappear. This is what happened with Mt.Gox. Bitcoins valued at $450 million got stolen and most of them were never recovered. And lest you think this was a black swan, stories of hacking and digital currency theft populate the news on a weekly basis. Securing digital assets from determined hackers is beyond most people’s pay grade.

The other not so obvious reason becomes apparent as you learn about cryptocurrencies and their ideological origin. The people behind Bitcoin hail from a deeply libertarian, anarcho-capitalist zeitgeist. They dislike centralized authorities of any kind. They abhor the word centralized and everything it stands for. The reason Bitcoin was brought to life was to do away with government control. Its raison d’aitre is to “dis-intermediate” governments from the money supply. You know, so there is no 3rd party taking away (Cyprus style) and devaluing (everywhere style) your hard-earned income and savings. Those folks don’t like the sound of banks, governments, or any trusted 3rd party.

Why, then, would you leave bitcoins on a centralized exchange? Not only is it a honeypot for hackers, but it also takes away the very thing that Bitcoin stands for: owning and controlling the keys to your funds.

Regardless what your motivation (security, ideology, or both) you need to be able to own and secure your digital assets.
Let me say this again. You cannot own bitcoin, Litecoin, Ethereum, or anything else, unless you know how to store and secure them. I won’t go into the technical details here. Suffice to say, securing cryptocurrency is not easy. It’s not easy to be your own bank. Even if you are comfortable with technology, it won’t be straightforward. There are no “universal” best practices. You need to scour Reddit forums, Medium articles, and YouTube instructions and decide what works for you.

If something breaks, if someone sneaks in and steals your coins, you’re on your own. No number to call, no shoulder to cry on. Just a wall to bang your head on. You can’t walk in an Apple Store and have a Genius set you up with Bitcoin. You have to do it on your own, behind closed doors, away from the prying eyes.

The future

So, yeah, the technology is not there yet. The industry is in its pre-infancy stage. That prevents most people from wading in. Having said that, we’re moving at breakneck speed to bridge that gap, to make digital currencies accessible to the people who want them.

For Bitcoin to reach mainstream adoption, it needs to lose some of its ideological edginess. You shouldn’t need to be a cypherpunk geek to spend bitcoin. Everyone stands to benefit from an international, deflationary currency, regardless their background or technical acumen.

My guesstimate is that widespread adoption is five years away. That gives the industry some time to mature, and consumers to get their heads around the profound significance of this unstoppable wave of progress.