Cryptocurrencies

[Tim]

One day I woke up with a brilliant idea: to make my own money. First, I had to decide what to call it. It had to be something catchy, something easy to remember.That was when I had my second flash of inspiration. I would my money Timmybucks. Then I had to ponder all of the various characteristics Timmybucks would need to be a good form of currency. It would have to. be divisible, durable, portable, scarce, and uniform.

I decided right away to get rid of coinage. No longer would things cost $14.99. From here on out it will be $15. Timmybucks will only be available in whole dollars. The great ideas just keep coming. I am a genius.

For my design I did zentangles on some post it notes. I printed $100,000 worth in denominations of 1 and 5 dollars, or Timmybucks if you will, and laminated them. That takes care of scarcity, divisibility, and durability. Now I’m ready to head to Vegas.

Yes, this all sounds crazy and maybe more than a little narcissistic but this is the essence of what the creators of bitcoin did.

After the global meltdown in 2008 and the subsequent bank bailouts, certain subsets of society started looking for ways to cut central banks, credit card companies, and governments out of the money equation. Bitcoin never really lived up to the ideal of eliminating a central authority. Every system devised for managing the coins ended up relying on one company or worse, one person. Setting that failure aside, bitcoin succeeded in one amazing and critical way: they got people to believe in the system and to trade goods and services for it. I could take Timmybucks to the black jack table at Treasure Island but it probably wouldn’t be long until I was chucked out on my ear.

The first items bought with bitcoin were two Papa John’s pizzas. 10,000 coins were used in the transaction (worth around 52 million dollars in today’s money unless my math is wrong). The next items bought were a ton of drugs through an anonymous site called Silk Road.

Bitcoin carried some significant risks and its association with a site like Silk Road didn’t help it get the blessing of banks or governments. There were a number of very real failures that could have destroyed the project. And yet, after every price drop it would recover.

When you read about the economies of other countries though, you can see why bitcoin continues to have an allure. Argentina is the primary example cited. Wences Casares, one of bitcoin’s most ardent supporters, is quoted as saying “I think I understand economics better than most people because I grew up in Argentina. I’ve seen every single monetary experiment you can imagine. This is street smart economics. Not the complex PhD economics.”

Regulations are necessary but when a government gets over-involved in the economy it can really screw things up. Hence the reason decentralized monetary systems are so attractive. Unfortunately, bitcoin still needs governments and banks to provide it legitimacy.

Popper’s book follows the evolution of bitcoin in the US and abroad. He introduces all the major players and relays the history in great detail. And it is a fascinating story.Part of me still wants to think of bitcoin as those things that come out of the question mark boxes in Super Mario. Bitcoin is real and I think it’s here to stay.

Anybody want to send me a pizza for 100,000 Timmybucks?

[Tim]

It would be 80 million right now.