bitcoin, the bazaar and Generation X

bitcoin by stealth
For the people who don’t have a bitcoin wallet or believe that Bitcoin is a technology that needs any time wasted thinking about it. Yes I’m talking directly to you, the Warren Buffet‘s of this world. Do you have an email address?

Warren Buffet as the man in street?
Warren Buffett giving a speech in 1998 to Florida University students saying he would flunk any student who gave a valuation to an internet company. Yes Warren Buffet strikes again as a seemingly intelligent person uttering complete rubbish. However he has consistently grown his folio by X% year on year without fail for 50 years. So we must respect this. But when the media start quoting people and never investigate the facts, you have to wonder who the media is serving.

There can be no doubts that there will be a long length of time before you are paying for goods and services with bitcoins in the High Street until using a wallet becomes as easy as sending a text or email and that took 10 years.

However before AOL and Compuserve seeded the market to the masses for email via walled garden, there were enough early adopters between:

  • Academia
  • Early commerical dial-up
  • AOL / Compuserve – aka Walled Garden but with Internet email gateways

I would postulate that these three based at around 1993/4 were enough to be the basis of a 5% of email users that took us up to the total user base of 1998/2000. Where SSL and payment gateways were created to handle automated credit card transactions. So lets have a look and see if it’s a 5% rule here?

1992 – 5 million users Microsoft Outlook launched
1999 – 400 million users Blackberry launched

Woe! – I was way wrong, it was actually in the region 1.25% – not 5%,  based on this source:

So what are those or could be those three groups’ now to get us to 1999 with bitcoin:

  • Early adopters
  • Travel agents
  • Street level

I’ve listed travel agents because when I went to Ireland in 2013 I was actually able to obtain the official exchange rate buying bitcoin in pounds on and meeting John in Starbucks in Dublin after we arrived by ferry. John was the Ireland side of another localbitcoin transaction. People often report that bitcoins are for hoarding, but plainly they aren’t when you go on holiday, because you can actually get a fair exchange. Yes bitcoin probably a privilege club right now, WASP male. However the remittance market will come, and when it does it really will help the poor and the unbanked around the world.

bitcoin and the bazaar (aka price stability)
So what on earth would cause your taxi driver, plumber, gardener, take-a-way to accept bitcoin?

The simplicity of a bitcoin wallets usage,  security and price stability are on their way each year, as I hypothesise that adoption rate of bitcoin should actually guide and signal the fiat value. The number of bitcoin users now in relation to the total practical user base within the next 5 years of bitcoin should outline it’s fiat price, by virtue of the curves the Internet has shown us.

When people assumed you have a mobile number and you can safety assume that anybody over the age of 14 in the UK has a mobile phone and email address, we can clearly see critical mass.

For email this was perhaps between 2008-2010. 80% of the UK population who were going to have an email address had got one. I am guessing wildly here.

As clearly we can assume that “bitcoin” / brand exposure in society/media is far greater and faster than the “Internet” was – like for like analysis. IE bitcoin equaled General Motors on the Internet in 2013. PWC report. The adopt curve despite it’s price stability and ease of use issues – is far faster than the Internet or email was.

Warren Buffet didn’t understand the “Internet” in 1998, nor does he understand “bticoin” in 2014. In way that’s interesting in itself, because he is of the age group that are determining bitcoin legal legislation. IE They haven’t a clue. If politicians had understood the Internet in 1998, and the capability it would have given the NSA, would they not have put more into it at the time to control it? Or more likely we’ll just have a wait and see approach by each country, with a slow trickle of decisions.

Does bitcoin need price stability in the short term for adoption to increase?

I am not sure, if more exchange hubs spring up at a local community level, travel agents and cafés who provide ultra competitive exchange rates in return for footfall. They provide’ll transparency and brand visibility.

At retail level, bitcoin payers could potentially obtain discounts because they not incurring cash or credit/debit card charges to retailers. In the UK as a retailer you have to pay your bank to pay in cash! On average to accept a debit card it’s £0.09 per transaction, however I cannot find a small business rate less then 19pence myself.

The UK’s Online Retail Association – IMRG 2013:

  • 1 in 3 online sales via mobile
  • Online retail sales up 18% year-on-year in December
  • 16% growth for the online retail market in 2013
  • 2013 ‘year of the mobile’: twice as much spent on mobile devices in December 2013 compared to December 2012
  • Forecast for 2014: 17% market growth and £107 billion to be spent online

Town centre stores are shutting down at a rate of 18 a day across Britain, according to figures.  Sept 2013. Analysing 500 UK town centres, they showed 3,366 stores closed while just 3,157 opened, a net reduction of 209 shops. This was an improvement on the same period last year when the net reduction was 953, but shows the high street is still struggling.

UK High Street – ****ed.

How many cash accepting High Street businesses will there be in 10 years in the UK?

Will the older people only just grew up with computers and mobile phones yearn for the days of cash born between 1961 and 1981? Will this group be the large second generation adopter? Generation X?

Generation X
The generation who are about to have it bad, loose you job at 40, you are ****ed.  Bought an endowment mortgage at the wrong time – mid 1970’s – ****ed. Pension – ****ed. Future ****ed. And because their children cannot get work, they will NEVER be the welfare state their parents enjoyed.

I think this is has got to be the most interesting group of future bitcoin users, old enough to take on the complexities of the technology with our current smartphones and angry enough to treat it like cash.

This is the group that currently runs small businesses, pay the most UK taxes and traditionally a plumber will accept “cash” for a discount when fitting a washing machine. Remember that large companies do not pay taxes and in the UK are now employing 1/2 million people on zero hour contracts, which is the same as the US. Your’re as good as fired at any time. Next week their are no hours for you to work – so you get zero pay.

In the UK, the government has created this problem, because it allowed a duality of UK tax payer and UK corporate non tax payer. And in the High Street this is having devastating results. For the rest of the 98% of UK tax payers as corporate entities or the self-employed. Inflation caused through quantitative easing maybe a touch paper to the adoption of bitcoin as days of “cash” are numbered if we look at money technology over the next 10 years. Surely money isn’t good, or a £5 pound note, but expression of this unit of X represents

Mark Cross is a consultant for - 37Coins is your global Bitcoin wallet. It makes financial transactions as simple as sending a text.