Everyone who encounters bitcoin for the first time grapples with how it works, and what it means. The former is relatively easy enough to learn, the latter however is something that everyone seems to have a different opinion on. ‘Is bitcoin the next Internet?’ seems to be the question behind many news articles and passionate debates alike.
Entrepreneur and bitcoin advocate Marc Andreessen has most visibly made comparisons between the two, while CNBC reported that many more venture capitalists thought bitcoin could be ‘as big as the Internet’.
Despite the comparisons’ obvious buzz appeal, it’s a serious question with profound implications. How alike are bitcoin and the Internet, and what conclusions can we draw from the comparison?
A natural metaphor
Within the world of monetary theory and finance, bitcoin is unprecedented. It is such a radical concept that most in the field are sceptical that the kind of decentralized technology bitcoin represents is even compatible with the modern economy.
The Internet thus provides an obvious reference point for a technology that seems utterly similar in its decentralization, open-source code, state of development, and most importantly its potential to disrupt on a global scale.
Indeed, if nothing else, the comparison can help effectively communicate the magnitude of bitcoin’s technological achievement.
That’s actually a quote from Eric Schmidt, and he’s talking about the Internet or the ‘network of networks’. Every network it touches it liberates. Already we’ve seen publishing, education, retail, and most famously music and film be disrupted in ways we could not have imagined. Does bitcoin represent just such a moment for banking and finance?
Given the fact that bitcoin cannot be centrally regulated, ‘an experiment in anarchy’ seems like an apt description. However for any bitcoin/Internet comparison to be truly useful and tell us where bitcoin can go from here, we need to compare their characteristics in much closer detail.