Dominic Frisby: Is Bitcoin changing the world?

Bitcoin itself isn’t changing the world, but the technological breakthrough that made it possible, the blockchain, is.

The first big point made in Dominic Frisby’s talk concerned the difference between money and cash.  Money can be coins or bank notes, but it can also be bank accounts, air miles, supermarket points, and so on –  anything you can swap for some good or service with the people promising to do this.  Cash is something else again.  Cash transactions depend on no middle man to register the change in the numbers.  Cash is anonymous.  Person A hands over cash to Person B, in exchange for whatever they’re exchanging.  Nobody else is involved.  Neither needs to know who the other person is or how he came by the thing being exchanged.  That is cash, and the point about Bitcoin is that it accomplishes digitally that same kind of one-to-one, completely anonymous relationship.  Bitcoin is digital cash.

For years, computer coders had been trying to replicate that cash  transaction digitally, and none of them could find a way of doing it without involving some kind of middle man.  … The blockchain was the breakthrough tech.

A blockchain is a huge database which is shared by all the people who use Bitcoin, which records every Bitcoin transaction that has ever taken place, and which is updated every ten minutes, with a new “block”. Each update then remains in the Bitcoin blockchain, unchangeably, for ever.

The price of Bitcoin at first rose crazily, but then it fell back.  Boom, and then, not bust exactly, but a big decline and then a flattening out, with a corresponding decline in public excitement and interest.

So Bitcoin hasn’t, despite all the early excitement, changed the world.  The one big Bitcoin change that Frisby did talk about is that it has made life massively easier for online black marketeers.  Black marketeers always want cash, and thanks to Bitcoin the “dark net” is now booming.  It took the FBI forever to shut down just one internet black market site.  When they did, dozens more immediately went online to fill the gap.

Similarly, Bitcoin is only the most prominent of many new digital currencies that the blockchain idea makes possible.  As long as governments control money, they will always have disproportionate power.

But:

We seem to moving into a kind of Hayekian period of competing currencies.

Which is, as Frisby said, nice.

But the blockchain idea has applications right across the computing board, and Frisby then moved on to talking at some length about these.  The application that spoke most appealingly to me was that identifying yourself to your computer, and hence to all the people with whom you interact via your computer, will become a lot easier, less clunky, and more secure.

Much less attractive, to me, was the idea that there might be a lot more political voting.  Blockchains make possible, said Frisby, voting that can be both non-corrupt and immediately counted.  Again, you stop relying on that middle man.

However, influencing the world by giving an Uber customer or a hotelier a good review (both things that Frisby also mentioned), or for that matter a bad review is one thing.  The political obsessives of the world foisting their political opinions, directly, every day, upon everyone else sounds like a nightmare of politicised interference, rather than any sort of libertarian utopia of competing currencies and completely secure internet trading.  Frisby merely alluded to such voting arrangements.  And although I may be jumping to a wrong conclusion here, he sounded like he was in favour of them.  Nevertheless, if blochchainery makes such arrangements possible, and if the politicians embrace them, then that will certainly change the world, and Frisby was not wrong at all to be mentioning such a possibility.

At the end of the bit of his talk where he discussed blockchain tech, Frisby said he had spent too long talking about it, but it seemed to me very reasonable that he should have got a bit carried away about blockchains and all their many potential impacts upon the world.

He ended by alluding to the fact that mobile phones, and in particular mobile phone banking and finance, are taking off big time, worldwide.  More people now have mobile phones than modern toilets.  This is a new world, upon which blockchainery will impact hugely.

If you sense that I feel rather out of my depth in describing all these dramas and excitements, you would not be wrong.  Do you say “blockchain”, “the blockchain”, “blockchains”, “blockchain tech”, or perhaps my own suggestion of “blockchainery”, when talking about this stuff?  I also remain rather mystified about how exactly (the) blockchain(s) (ery) (tech) remain(s) impervious to the attentions of hackers.  If Frisby explained this in his talk, I missed that bit.

There were some mysteriously annoying noises off picked up by the video camera that night, sounding rather like sudden gusts of high wind.  But these noises are well worth listening past, so to speak.  Also, Frisby mentioned that he was suffering from a rather bad dose of hay fever, which would not have been obvious to me if he hadn’t said, but which may account for why there were moments when he seemed to lose the thread, somewhat, of what he was saying.  (In this respect his manner of public speaking reminded me of me.)  But such blemishes did not, for me anyway, spoil this hugely interesting and informative talk.  It lasts under half an hour, and I recommend it.

More generally, I recommend the man himself.  Dominic Frisby is, despite the occasional hesitations in this particular performance, and despite also what he said at the start of this talk about how he keeps his commentary about things like Bitcoin and blockchains separate from his other career as a stand-up comic, a most engaging and entertaining speaker.  His air of good humour and all round nice-guy-ness comes across no matter what he happens to be talking about or how serious he is being about it.

There are many other bits of Frisby video available on the internet, both serious and comic, and there is now of course his book about Bitcoin.  I also particularly liked his earlier book, which he also mentioned in this talk in passing, entitled Life After The State.

Very interesting talk.  Very interesting man.

  9 comments for “Dominic Frisby: Is Bitcoin changing the world?

  1. Ken Ferguson
    Mar 3, 2016 at 8:49 am

    It has been clear to me for many years that the front line of the battle to protect the individual from the tyranny of the state is the maintenance and enhancement of internet freedom. The state is reliant on it’s ability to tax it’s citizens and, for that to be effective, it must have control (either directly or through a proxy) both of the currency and the medium in which transactions are carried out.

    For that reason, an anonymous transaction carried out in cash is a greater threat to the foundations of the state than a terrorist bomb. Governments have been gradually trying to eliminate this threat by the imposition of limits on the use of cash and spurious “money laundering” legislation. Technology will soon allow it to eliminate physical cash completely so the importance of the block chain facilitating anonymous digital transactions is crucial for the future.

    My prediction is that, in a few years time, there will be two entirely separate economies- one controlled, regulated and taxed by states and a supra national “black” economy conducted online and in a crypto currency, The trading sites on the dark web will not only offer products because they have been made illegal by some authority but will also sell completely legal good and services at a discount to the vanilla economy.

    Exchange between the two sets of currencies will become impossible (if you currently try to put bitcoin profits into your sterling bank account HMRC will want to know how you came by it and why they had not had their tribute). The hope is that freedom loving techies will be able to stay ahead of the lumbering and primitive agencies of the state in this and other areas, but the importance of this battle cannot be overstated.

  2. Julie near Chicago
    Mar 4, 2016 at 3:34 am

    Very interesting talk indeed, and thanks to Brian for the helpful writeup.

    I do have two concerns about the physical side of any electronic financial system, including today’s credit cards and online banking, but in particular with regard to Bitcoin or similar “electronic cash” systems.

    1. Mr. Frisby says that Bitcoin (presumably meaning Bitcoin account ledgers) are apparently unhackable. But history tells us that what man can devise, man can break. Right now there’s all this fuss about whether Apple must build “back doors” so that its iOS phone systems will be available to government scrutiny, should a government (oh sure, only the U.S. government of course, HAH!) wish to do so.

    Do we have some guarantee signed in ichor by the Great Frog that Bitcoin or its successors (however improved) will be exempt from this law?

    That’s a serious question, not any kind of put-down or sarcasm.

    And, my congratulations to Mr. Frisby for mentioning the issue. It’s one that shouldn’t be ducked, not in this age of identity theft and of governmental spying on people’s bank accounts and financial transactions generally.

    2. There is also the second law: There is more than one way to skin the cat. One is simply to make trading using Bitcoin illegal. Don’t talk to me about the U.S. Constitution, let alone anybody else’s. Whatever rule man can write, man can circumvent with enough plausibility to get by. Governments are the all-time grand masters at this.

    [We’ve already seen gold coins confiscated in the U.S. under the claim that they were “counterfeit.” Well, they weren’t. They were simply round gold objects resembling coins or tokens, stamped with a nice design and words. Nowhere did they pretend to be U.S. legal tender. (I believe the Liberty Dollars were up in the “nearly pure” category, 99% or whatever it is; but I can’t swear to that.)]

    By the way, Ken addresses this from one angle in the final para of his initial comment.

  3. Ken Ferguson
    Mar 4, 2016 at 6:24 am

    There is more than one way to skin the cat. One is simply to make trading using Bitcoin illegal.

    Julie, you are quite correct and there is no doubt that, at some point, that will happen.

    Already you can see nation states collaborating at an international level to ensure that their share of taxation from multi national companies is protected and that tax havens are shut down. They are not prepared to have market competition between countries to offer the lowest rates of corporation tax- they want to form a cartel. If Google and Amazon are thinking ahead they should be planning corporate HQs on the moon and have their drones deliver from there!!!

    My hope is that technology will continue to allow individuals to trade anonymously and secretly however when we get to the point that some world council makes doing so illegal, it will be up to each person to make their choice. Do they obey a law which so flagrantly impinges on natural rights or continue contributing to the beast that enslaves them?

    • simongibbs
      Mar 5, 2016 at 4:45 pm

      They will just start taxing Bitcoin transactions.

      • Julie near Chicago
        Mar 5, 2016 at 8:22 pm

        Yes, Simon, once they can track the transactions. Didn’t they do exactly that, or try do, with Second Life “money”? Seems to me I remember a bit of a flurry over that some years back.

        • Mar 7, 2016 at 5:09 pm

          They will apply taxes and regulations to the institutions that trade and traffic in blockchain currency and alt currency, They will also pass regulation to increase the power and security of blockchain monopolies making it nearly impossible for newcomers to run their own exchanges. They don’t have to track individuals at all. Soon all transaction will have a “fee”.

  4. Darren Hopkinson
    Mar 13, 2016 at 9:29 am

    I echo what Ken has already said, but would also add in response to those predicting that Bitcoin will be hacked, shut down or inherently taxed, that this is simply not possible due to the strong cryptography employed in its design. Even if you may not yourself have a robust understanding of the mathematics, because the software powering bitcoin is public (“open source”), you can be confident that it has been verified by those of us that do.

    The only danger of Bitcoin not succeeding is losing the battle for public opinion. Which is why, in this battle, you see all the resources of the State currently being employed speeding Fear, Uncertainty and Doubt. Sadly, I fear this tactic is starting to work.

    • Mar 13, 2016 at 1:12 pm

      If it is possible to see a transaction then it is possible to tax it. There are many websites where transactions can be seen, they are not done secret.

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