The Programmable Currency
Over on Phil's blog, I called Bitcoin a "programmable currency".
I have no idea what I actually mean by that, but much like the "exmosis" moniker, I get the feeling it's something important. Sometimes the words get ahead of their own meaning.
Originally I guess I meant "programmable currency" to refer to a value-medium (like any currency or asset) that was easily scriptable - for example, a bedroom coder can easily shunt huge numbers around with the right JSON calls.
No need for institutions to validate. No 3-day waiting times. No fecking Verified-By-Visa splash screens.
That's huge. We're starting to see meta-currencies, sibling-currencies, and other "spin offs" from Bitcoins, but which are transferrable, synonymous, backed by them. Witcoin converts Bitcoins into a unit for forum-activity. Bitbills convert Bitcoins into a "physical" form through hidden QR codes.
All we're doing is passing IDs around. Some of them are open. Some of them are closed.
A New Network
Typically, this has meant people rent server farms, or upgrade their GPU to get more processing power. But recently we've seen people pooling together to share not just their resources, but profits from this "mining" activity. Just like Lottery syndicates.
I won't call this a "networked economy" - influence and power are always network based. Just the network is shifting from those with enough resources and impetus to wield influence, to something else. Here, the network is based on TCP/IP rather than on "schmoozing". Here, the content is algorithmic power, rather than rhetoric and persuasion.
(A sidenote: Brute CPU power alone is not what Bitcoin is based on - there are plenty of software/hardware-level optimisations one can do to increase computational power. Quality cracking, as well as quantity.)
I haven't decided yet if Bitcoin is a currency or not - any more than if I've decided the Pound is a currency or not.
But it does store value, and you can transfer it between people. That's good enough.
We can do business with it. We can keep track of notions of debt with it. We can speculate with it. We can track value over time with it. The notion of "currency" gives way to what is simply "practical".
More importantly, we can do all this globally, and for the transaction fee we decide. I can send a penny's worth of Bitcoins to someone in Australia in the same time it takes me to send it to someone in the same room as me. I can (for now) be sure that all of that penny's worth will go to them, rather than some middle-man holding transactions hostage.
Remember when you first got e-mail? That crazy notion that you could basically do what the postal system did: send a letter anywhere in the world, but for free? With a single, universal address?
Here's mine: 16XfuKyktJDUJLMGwAu8u5Y2Wq1b61h7Sz