Notes from talk by Balaji Srinivasan at Kholsa Ventures event https://www.youtube.com/watch?t=26&v=JIxwTx7o_B4
What is bitcoin? Why are we (at 21 and Andressen Horowitz) comparing its scale to the internet?
Balaji references this clip, "What is internet anyway" with Bryant Gumble et al on USA today from 1994. What we don't know we can't understand. Early in bitcoin lifecycle (same can still be said for Internet).
- Btc is a protocol
- Here to stay (recently as 2 years ago much less certain it would survive)
- Bigger than google
- Powerful 4-way network effect
- Open source. Linux vs Windows.
Naive digital cash. Banks intermediate transfer of value -- a system of debits and credits. We can replace the central actor with a decentralized group of miners (who work to verify and record transactions).
Payments as packets. From the command line you can move funds. Peer to peer payments.
Bitcoin disintermediates the banks. Any node can talk to any other nodes, like email. To end user you have a public address that you share / anyone can send to that address. But only you can read that address since it requires a password that only you know.
Government and finance establishment is now alert to, and studying bitcoin. 2014 was the year of 'institutional acceptance'. All the payment systems accept bitcoin, now 100K + retails and merchants.
US government sold $30k worth of confiscated bitcoin, which is a de facto legitimization. They wouldn't sell $30k worth of seized cocaine back to the public.
Mining consumers more power than all of Google servers, by a huge margin! 2014 bitcoin mining was up 100x, then S-curves at Moores law kicked in on the ASC gen miners.
That bitcoin networks consumes more energy currently is both fascinating (as it was dismissed as a joke as recently as a few years ago) and frightening (a massive amount of electricity is consumed for a payment network used by far fewer than Google).
Extensible, programmable and rapidly improving.
If databases have value, and the right to write to databases also has value, then satoshi and bitcoin must as well.
Blockchain can serve as global notary public. This is a basic industrial use of bitcoin.
Miners creating ~$1 million per day in sell pressure by instantly liquidating their bitcoins for fiat to fund the on-going operations (2015, $250 bitcoin prices).
Balanced by global buying demand despite that nearly no one is actually using bitcoin. If you are spending the money with a merchant, they have to liquidate it for accounting/legal purposes (Dell reports their earnings in USD, not satoshi).
The size of the network (350x bigger than Google) has already reached the scale to support global payment infrastructure, it is already large than many entire countries banking systems. Estonia has its own currency with 1.3 million people. There are over 5 million bitcoin wallets currently.
This will curtail the forced selling. Bids will find reduced liquidity on the ask side, and price ramps will follow. This scenario could play out mid-2016 based on historical cycles in mining rewards.
Bitcoin is a protocol, payments are packets. Decentralized the centralized agent (like banks). Here to stay (large reputable private and public institutions are making investments). Bigger than Google.
Bitcoin is open source, it is to Paypal what Linux is to Windows. Powerful 4-way network effect between miners, developers, merchants and users.