This is the week for “revisited” blog posts. Today: bitcoin. In my first post about bitcoin I expressed my concern that we may be experiencing a speculative bubble that might ultimately destroy the currency’s usefulness. Since that post, which was just last week, the $/bitcoin rate has gone from $8 to $26! That’s already above the target estimate for the currency that I heard from one entrepreneur working on a bitcoin related business. I ran across another link recently suggesting that were bitcoin to succeed, the ultimate value for 1 bitcoin might be around $2 million. Obviously, those kind of numbers being out there will only fan the speculative flames.
In the meantime, it didn’t take long for governments to start paying attention to bitcoin. Senators Schumer and Manchin wrote a letter to the AG and the head of the DEA about the use of bitcoin in conjunction with a service called SilkRoad that apparently facilitates purchases of illegal drugs. Clearly their concern is that bitcoin might be used to facilitate illegal activity online in a way that cannot be easily shut down by serving notice to existing payment processors.
What is fascinating to me is how these questions come down to very fundamental trade-offs between individual freedoms and the desire for a civilized society. These battles were previously fought during the emergence of the modern democracy. We will clearly have to revisit these.
At one extreme is a design in which we all operate on the internet with our real identities and don’t try to anonymize anything. Given that humans are prone to a variety of irrational behaviors (and that these are an essential part of who we are), this would ultimately require a shift in morals and laws to really work (such as possible some acceptance and legalization of drugs, prostitution, gambling). It would also require strengthening safeguards around free speech and more broadly what I have referred to as an “Internet Bill of Rights.” One might think of this as the (radical) transparency model.
On the other extreme is a design in which we build a variety of crypto schemes and try to extend our existing notions of anonymity and privacy to the online world and potentially even strengthen them there. This model substitutes technology for legal protections. Free speech and indulgences in human vices would be enabled by networks such as Tor and currencies such as bitcoin. One might think of this as the crypto model (for contrast).
There are real pioneers and super smart people advocating for each of these extreme designs and in some cases living their lives accordingly (e.g., Cindy Gallop for transparency and Satoshi Nakamoto for crypto). Generally, I believe the actual effective design will likely be somewhere in the middle, but figuring out what that middle ground is will be hard – possibly as hard as the struggles in the transition to modern democracies.
So in discussions such as net neutrality and PROTECT IP, the question is not just what Internet do we want? But rather: What society do we want? I expect the two will be synonymous with each other. Very few politicians seem to realize that so far.
