This morning I came across a tweetstorm by Brian Beal.
This gentleman is a Senior Director, Strategy and Innovation – Telco and Edge Cloud group @vmware
Clearly a highly intelligent and in tune with technology person and it got me thinking about this point of view.
To sum up his thoughts on BTC
- BTC has an extremely low number of transactions relative to its market cap. Few people are actually using it.
- Its growing much slower than expected.
- Its a cult with no actual use case.
I’m not a BTC fanatic, I see the problems with BTC, however I think that although its far for from perfect, its an extremely important step in the right direction.
Brian issued a challenge – My offer stands: tell me what the actual killer use case is for Bitcoin and convince me why anyone should buy it. Nobody has actually told me what it does better than alternatives like cash or credit cards or even (gross) PayPal. I’m waiting.
So I will take up Brian on his offer, and try and formulate the killer use case.
Use Case #1: International, human to human transactions
Lets visualize a situation, I am living in Dubai (I am). Brian is living in the US. I have a rare, collectible book that he wants to buy from me. He doesn’t know me, he is not my friend.
How can Brian pay me?
- Credit/Debit card – off the bat, this is not an option, since I’m a private individual, and don’t have access to an online payment merchant to handle this transaction. However, I might add that even if I did – he could easily claim a chargeback once he received the book, and I would not have the necessarily legal documents to prove my case. (I have been through this situation many times).
- SWIFT bank transfer – this is an option, however banks are a nightmare. Even in Dubai, which is considered a bank heaven with 0 income taxes there are more and more questions about transactions even within the country. Don’t get me started about incoming international transfers. Not to mention that I have to make declarations that I’m not a US tax resident etc. Keep in mind, I could get the money and not send Brian the book and he would not have any legal recourse.
- PayPal – this is not an option, since PayPal only does withdrawals to US bank accounts. I could never get the money out of PayPal.
- WesternUnion/Moneygram – this is a feasible option, however I would physically need to drive to a location to collect the money, not to mention the insane transfer fees. Once again, I could send the book and Brian wouldn’t pay me. Or he would pay me and I wouldn’t send the book.
FYI – international escrow services for a book costing 200$ is really not worth it. It would probably cost that in transaction fees.
Lets see how BTC compares.
Brian could purchase some BTC within minutes on coinbase and send it to my wallet within minutes again.
Additionally, we could easily make a multi sig wallet. Brian transfers the BTC there, I confirm this and send the book.
Brian receives the book and signs the transaction to release the payment to my BTC wallet.
I transfer the BTC to my local exchange, convert it to AED and withdraw to my bank account.
Ofcourse, I wouldn’t, I would just keep it in BTC 🙂
Now imagine for a second I’m not living in Dubai, and I’m living in Mogadishu. I don’t have a bank account at all (which is BTW 31% of the world population or approximately 2+ billion people).
There is no WU or Moneygram here.
There is physically no way Brian can pay me without BTC.
FYI – there are around 3 million expats in the UAE who remit payments back home EVERY MONTH.
Use Case #2: Machine to Machine Payments
Now imagine I am a fridge and Brian is the ERP/CRM system of my local supermarket. I run out of salt which my owner has programmed to always be in stock. It cost 99 cents.
How am I (fridge) going to pay for it?
SWIFT, WU, PayPal are out of the question immediately.
Credit/Debit cards are ofcourse still an option. What if I’m paying 5 cents?
What if I want to pay for the goods only once I receive the goods, and the shop won’t send the goods until its paid? Again, quick multi sig wallet that gets released once the goods are confirmed by me (the fridge).
A tokenized wallet is clearly a great solution for this.
Given that there will be millions of transactions going on, are we really going to link our credit card to all our devices? Or a seperate one for each?
Programmable money is going to be a game changer that most of us don’t understand.
The adoption problem
I won’t lie, I am also frustrated by the slow adoption of crypto, however think of the dot com bubble. Everyone predicted buying everything online. It didn’t happen. Wait, it didn’t happen THEN.
The prediction was right, the direction was right, but the timing wasn’t right yet.
People were arguing about how pets.com could be valued at hundreds of millions of dollars when it was generating thousands in revenue, and they were right at the time. They are not right today.
The innovators dillema is a book that goes into this phenomenon in more depth.
I think everything will be tokenized sooner or later, from payments to memberships at gyms, to bus passes, to school memberships. Some of it will be done on centralized databases, but hopefully, most will be on decentralized networks that will be free from any censorship, willing or unwilling and free from cross border transfer difficulties.
I think its truly MAGICAL that there is a protocol that exists without a centralized control, that hasn’t crashed or gone down in a DECADE (!!) and simply works. Works easily and immediately. It works easier than email. A grandmother or a Somalian peasant can use it.
It amazes me how anyone who has ever actually USED BTC can fail to see this. I truly wish Brian keeps and open mind and tries to actually use BTC to see how beautiful it is.
What do you think?