What connects self-driving cars and cloud storage with digital currencies? The answer lies in the digital basis for trust that the Bitcoin protocol provides
IT SEEMED like a good idea. Why not mark our special report on digital money by putting the price in Bitcoin on the magazine's cover? Alas, it was not to be.
Our money people weren't keen to add a currency whose value might plummet (or rocket) at any time. We weren't sure how we'd process payments. And we couldn't find a stockist who would accept Bitcoin anyway.
That pretty much sums up where Bitcoin is today. Mainstream interest is growing fast, but its value remains volatile and its infrastructure embryonic (see "Problems already cloud the currency's future"). As our reporter found during a Bitcoin-funded road trip, you can't yet use it to buy much in the "real" world without tedious workarounds – scarcely the seamless payment system you might expect, and no match for cash or cards (see "Can you live on virtual money for a day?").
Bitcoin itself may never rise to this challenge. Its foundations, so daringly different to those of traditional currencies, may be too weak to support meaningful financial activity. It may end up co-opted by Silicon Valley and Wall Street, as previous financial innovations have been, or even by a desperate nation (see "Three scenarios forecast the future of money").
But Bitcoin is not the only game in town. It has inspired others to build systems that will enable a much wider range of applications. Some, such as insurance, will be familiar; others, such as cloud storage or self-driving cars, are barely related to what we think of as finance at all (see "How its core technology will change the world").
The common denominator of all these applications – and the real value of the Bitcoin experiment – is a digital basis for trust: the "block chain", which allows transactions to be recorded without reams of red tape. Get rid of the red tape, and you could also get rid of those who make money by dealing with it.
So by opening up the Bitcoin protocol to the world, "Satoshi Nakamoto", its mysterious inventor, may have democratised finance – much as open internet protocols have democratised communication. If so, it's not just the billions of dollars invested in Bitcoin that are at stake, but the very nature of money itself.
One modest upshot: you may soon be able to buy your copy of New Scientist with any currency of your choice. Or, for that matter, with a currency of your own.
This article appeared in print under the headline "Not small change"
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