First, the distribution monopoly of the Postal Services was hit hard by the Net as people discovered they didn’t need to buy stamps. Then, the copyright industry’s distribution monopoly was flatly and unceremoniously run over. As a third and fairly recent victim, we find the old centralized journalism with its tightly controlled news distribution. As fourth and coming victim, there’s an information distribution few people have thought of in terms of information: the money in our society.
We’re certainly using cash freely and casually as we go about our day, but most of our money-moving happens in other ways than by bill and coin. On a moment’s reflection, it is a miracle that there’s actually an industry able to charge 50 to 60 euros a year just to maintain a number — our account balance — in a perfectly ordinary database for us, and the ability to send some dozen messages a month with amounts attached. How is it remotely possible that we still need to pay for such a ridiculously simple information service?
This is a translation of an op-ed piece in the weekly large paper Ny Teknik (“New Technology”), published yesterday on paper and Tuesday on the net. It is available here in its original form, with plenty of comments in Swedish.
There’s an expression called regulatory capture. It means that an industry manages to write their own activity so deep into the law books, by way of lobbying and similar activities, that nobody is able or allowed to compete with them. In this way, they are assured of their market and profitability by regulation and law. If any industry has succeeded in this, it’s the banking sector. The copyright industry is working hard at it, but are clumsy amateurs in comparison.
Therefore, it is especially heartening to watch a technology that will wipe the floor with the entire banking industry and obsolete it almost overnight.
The technology is called distributed cryptocurrency, and the specific kind I’ve been looking at is called bitcoin. The first time you send a half-euro to India on a Sunday and the receiver sees his funds immediately almost feels like magic. Nobody except me knew I was sending money, nobody but me and the recipient could see that he got them. With the old banking system, it wasn’t worth it to make transfers of less than some tens of euros, and they always took several days. There were bank holidays. Opening hours! Here, there’s a voluntary transaction fee — a fraction of a cent.
Handling money worldwide became as easy as handling mail all of a sudden: receiving, sending, sorting, viewing. What’s new is that there isn’t any central point of control that can make decisions about your money, or even about the currency as such. Nobody can freeze your account, and no central bank can start the mints and bill presses to pay off the governmental debt. The money is physically on your own computer in the form of cryptokeys that the bitcoin network recognizes as a value.
The technology also has good similarity to cash in the aspect that it is almost completely anonymous, which makes us privacy enthusiasts happy. With the important addition that this kind of cash can be sent over a distance.
Banks and credit card companies have skimmed between three and five per cent on every purchase we’ve done in stores just to handle a couple of ones and zeros. On every purchase! All of a sudden, there’s an alternative that enables the merchant sector to just cut off this middleman between us and them.
Guess how many excuses that banks will make up to try to have bitcoin banned?
This article is also available in other languages: Hungarian.