Just released our short Bitcoin documentary on https://www.SQ1.tv

The Bitcoin Phenomenon

Starring:

- Gavin Andresen
- Trace Mayer
- Erik Voorhees
- Fred Ehrsam of Coinbase
- Jeremy Liew (venture capitalist)
- Peter Vessenes of Bitcoin Foundation/Coinlab
- Bennett Hoffman of Buttercoin
- Angela Keaton of Antiwar.com

The primary storyline looks to show the difference in perspective between the libertarians/early-adopters and VCs/entrepreneurs looking to take Bitcoin mainstream. "There is clash of ideology and ideals" as noted by Jeremy Liew. Erik Voorhees offers a steadfast position. The central question asked is does Bitcoin need to shed its politics in order to pursue mainstream adoption.

We also have full-length interviews with all of the subjects above as bonus footage.

https://www.SQ1.tv/bitcoin

I'm going with the elephant being a column

Let's forget the properties of bitcoin as we are unlikely to convince each other. Let's look at the demand characteristics. Who the buyers of bitcoin are is likely to give us insights into how the main buyers are likely to perceive market conditions and how the asset will perform in the short to medium term.

My bets:

1. Less than 5% of bitcoin owners/community have ever owned gold, maybe 10% if I'm off. The bitcoiner is young. They are not looking to preserve wealth as much as they are looking to get rich. In my view, this shows a lack of substitutability between gold and bitcoin in the eyes of its primary holders.

2. The owners of bitcoin expect bitcoin to grow in value considerably over the price of gold. Gold was over $800 for a brief period in 1980. Stocks have vastly outperformed gold over the past 30 years. If you take the 1981 or 1982 lows to the price today, the S&P 500 or the Dow would have outperformed gold. I doubt any bitcoiner is looking to make 5x over 30 years like they would have with gold. By the way, dollars saved in a savings account at an average of 5% risk-free interest would itself have compounded to 4.3x the initial savings over 30 years (1.05 to the 30th power). (Bitcoiners please note: People don't keep cash in pillows for 30 years, it earns interest even in a savings account. Over 30 years, the risk-free FDIC insured 1-year yield was around 5%. Gold has barely kept pace.)  

3. The bet on bitcoin is not a bet against the dollar or "fiat" for most bitcoiners. It is a speculative bet on the adoption of the protocol. I do not believe that bitcoin holders merely expect bitcoin to move lockstep with gold or oil.

4. If the protocol takes off and is widely used, you could see a $10,000 bit coin, but this would have nothing to do with US or western rates of inflation. The asset value of a bitcoin is decoupled from inflation. It is influenced by adoption of an electronic communication protocol.

For an asset where the upside is purely predicated on adoption of a protocol, the closest thing I've seen are .com domain names. The utility wasn't clear to most. You had to be tech-savvy to see the potential. The earliest adopters were the nerdiest.

You got to see my point.

LiteCoinGuy,

I'll complete it regardless. We'll use our general funds, remove a day of shooting, find a sponsor, raise investment capital, and/or figure something out. We already have a ton of great footage. (I'll probably skip producing individual interviews with all of the key bitcoin players, which I think will be awesome, but I'll focus on the main program and get it done.)

Even @ $25k, it will be a loss-leader for SQ1.tv. If you notice, the primary thing we're focused on selling is $75 membership that includes access to either a NYC or SF event.

http://www.kickstarter.com/projects/sq1/the-bitcoin-phenomenon-on-sq1tv

We have 100 tickets to each. If we sell it out, that's $7,500 per event. It includes 1-year membership to SQ1.tv, screening w/ popcorn, a panel discussion, and maybe an after-party. With the event, I can probably also get it sponsored for considerably more - which is necessary, as putting on an event has a meaningful cost as opposed to simply showing the production online. But events are fun and good for the SQ1 brand.

My reservation with direct sponsorships of the film is this: It is psychologically tough to separate an advertiser from being an influencer in some way; they won't be, but I don't even like the appearance of it. The primary conflict I am looking to address is what happens with the Libertarian ideas of bitcoin as VC-backed startups attempt to take bitcoin mainstream. (We can't simply have VC-funded startups pay for sponsorships while the Free State Project or the like are on one side of it - there are two sides to this conflict.)

As such, my thought is to get the partnering sponsors to fund the event, while memberships back the production of the film. The event ends up subsidizing the movie and avoids any perception of conflict of interest.

If you are in NYC, Philly, NJ, or New England, get down to the event. If you are on the west coast, you need to get up/down to SF for the event. We'll do it in late fall.

meanig, appreciate the response. In my view, deflation is worse than inflation for young people. Wages falling for 5 years in a row is deflation. I take it you are in the euro zone. For young people, inflation is better. For very wealthy people that had a lot of money 5 years ago, their purchasing power has increased. They can buy even more labor for the same amount of euros as opposed to 5 years ago. The double whammy is that if a young person borrowed money 5 years ago to be paid back today, in addition to the interest, the principal takes a larger share of today's wage than the prevailing wage 5 years ago. Your debt-to-income ratio gets worse in a deflationary climate. (This is one of the reasons that Japan's debt-to-GDP is at 240% today.)

Sorry that I offended you, Vladimir. I don't consider bitcoin or gold money. I think of bitcoin as an asset. That's why it is in the title of the thread: "Bitcoins are more like domain names than any other asset"

I consider money to be the sovereign currency in the state that you live in...that I can use at a moment's notice within said nation-state to buy milk.

My only point is that the investment characteristics of bitcoin are more like domain names in 1994-1997 than anything else.

Even the characteristics of the market participants are different: 100% of bitcoin buyers and 100% of domain name buyers have computers.

This is not trivial. Today, the world's largest buyer of gold on an annual basis are Indians. The majority of purchasing is done during wedding season post-Monsoon. Tens of millions of Indians buy gold....villagers, largely rural etc. It is India's second-largest import after oil. One of the reasons why gold is bought is the lack of formal banking in Indian villages and another reason is to be able to transfer wealth to the bride when she joins the groom's family. The vast majority of gold buyers in the world, I would venture, do not have access to a computer. You are welcome to look at the World Gold Council's website: http://www.gold.org

The average person buying bitcoin today is a highly-technical person speculating on the future adoption of a protocol. The characteristic of the btc buyer is similar to the domain buyer, online poker player, etc. (And no, I'm not comparing .com domains to online poker.) It is a demographic observation.

The difference is that I can create BHUcoin with the exact same properties of bitcoin and nobody would accept it....just like no one cares about .biz domains. The adoption of the protocol is what is the key value driver.

Prove the point? Gold is physical. It has chemical properties. I can use it on my teeth or for bling. Gold doesn't merely exist electronically as a record. I'll bet in the year 2141, people are mining for gold. Gold is held by central banks. If the Internet died tomorrow and all electricity ceased to exist, gold would still exist. Gold existed before the Internet and written language. If human beings ceased to exist, gold would still exist. Gold might exist currently on Mars or Jupiter.

I mentioned that as a difference in the original post.

I think it works the same as an asset class in the aggregate. Owning a bitcoin is a share of the aggregate protocol while a domain is a specific destination within the protocol.

The comparison holds true in big picture terms. For any speculator buying bitcoin to hold, studying the appreciation of domain names in the aggregate is the closest thing.

Countries issue bonds and pay bond interest in sovereign currency; central banking systems are set up in sovereign currency; taxation power backed by force and property seizure is denominated in sovereign currency; legal contracts and disputes are adjudicated in sovereign currencies. Sovereign currencies are accepted by all merchants within their respective nation states. So currency and bitcoin are totally different too.

I think we'll cut into one full piece taking it all the way from inception to the current state of bitcoin. We'll cover satoshi, mining, speculation, cyptography, network effects, the Libertarian argument, prohibition such as gambling and drugs, VCs entering the market, the new entrepreneurs, and future applications. I think the variety of people interested in bitcoin is the most interesting part.

After this, we could do a 6-episode series. I was thinking about covering one start-up from bitcoin concept to funding to team formation to product development to marketing. It could bitcoin startup reality series. Or it could be theme-centric episodes....bitcoin in Berlin, bitcoin and the free state project, bitcoin and gambling, etc.

Additionally, we are planning on 6 10-minute full-length interviews edited by us for each of the main participants such as Gavin, Erik Voorhees, Jeremy Liew - a top VC, a couple of the entrepreneurs, Steve Kubby - a major marijuana legalization proponent. We already have the footage, so simple enough.

Beyond our initial commitment to The Bitcoin Phenomenon and releasing the individual interviews, I can't commit to the series though. We have other shows that will take up bandwidth including DEALMAKER, TERM SHEET, TRADING DESK, AMERICAN ICON, CASE STUDY, and STATECRAFT. Here's what we're thinking with these shows:

http://www.sq1.tv/about

LiteCoinGuy, thank you for the kind words.

And I know you meant it differently, but we don't take "donations" at all in any currency. I'm opposed to the concept of an entity created for future profits asking for donations. I certainly hope and expect to make profits in the future with SQ1.tv. Also, as a matter of pride, our goal at SQ1.tv is to provide you with fair value for every penny or btc you pay us. I view Kickstarter as a way of selling pre-orders in an aggregated way, but not as a way to solicit donations.

We sell subscriptions to view our content. I would like people to subscribe to SQ1.tv if they believe in what we're doing.

We'll likely add a bitcoin subscription campaign, but for now I'd like to focus our efforts on driving our Kickstarter campaign.

the analogy is not perfect, of course. 

Currency issuers are members of the UN and have armies; gold is mined using earth-moving equipment. Nothing is a perfect comparison.

Domains names and bitcoin are as close than anything else.

It's beyond this. From personal experience, when I heard of bitcoin being described as a currency that was a threat to sovereign currencies, I rolled my eyes and was dismissive (still am.) Once I heard it described as a low-level communication protocol like SMTP, I understood bitcoin's implications and commercial potential. Most VCs and entrepreneurs are betting on the latter.

From personal experience, I have never bought gold (it's archaic), but I have bought 4-figure, 5-figure (BondFunds.com), and higher domain names (MunicipalBonds.com), etc.

The difference in the initial value is this: Almost all sovereign currencies were initially either pegged to gold or to another established currency; as such the initial risk of adoption was neutralized. (The pound and dollar were pegged to gold for a long time. Many Arab currencies are pegged to the dollar currently.)

With both bitcoin and .com domain names, the initial value is a speculation on the eventual ubiquity and adoption of a protocol. And just as people used to scoff at a person spending a thousand dollars on a domain name, many look at bitcoiners in the same skeptical way. And people complain about bitcoin hoarders the same they used to about domain squatting.

Bitcoin and domains also are not actually owned by the individual; it is a record in a ledger. (Yes, paper money is also largely digital, but it can be held in widely, immediately identifiable paper form.)

Lastly, if the bitcoin protocol is not adopted, bitcoin is worthless. Just as .net or .biz domains largely are. The bet is on protocol adoption driven by network effects.

What is easier for people to understand: "Yo, bro, bitcoin is an electronic currency that is going to take over the world," or "uh, it's like buying domain names before everyone knew what to do with .com domains, bro." The first is grandiose; the second sounds plausible.

LightRider, let me clarify as I always believe in having an open mind. I spent a few weeks in India this summer. I was also born in India and immigrated to the United States in grade school. I have witnessed abject poverty of a type that any visitor to India sees. Any tourist to India knows that to see an 8-year old carrying an infant sibling begging at a stoplight for money is a common site. India leads the world in child malnutrition rates. Over 500,000 children die per year from dysentery.

This year, however, I was very pleasantly surprised in Bangalore and Chennai, both in South India. There were massive infrastructure projects being built. I noticed minimal poverty of the gut-wrenching, disheartening variety. Even 6 years ago in these same cities, I noticed large numbers of beggars and street children; I didn't this year. I was stunned. I also noticed some of the population spoke hindi, which is not spoken in the south. This is due to labor shortages where hindi speakers migrated south for jobs. It is unpopular to say this, but wealth is definitely trickling down in South India while North India, where export-oriented industries are lacking does not enjoy the same degree of poverty alleviation. This is the market working.

There is another perspective I have being born in a 3rd world country with my family's sole ambition when I was a child to migrate to a country with better economic prospects: The average American owns a car. You cannot claim to be poor when you own an automobile. You cannot claim to be poor when you have indoor plumbing and a couple of good meals a day.

In India and Africa, there is no such thing as an obese poor person; this would be an oxymoron. Poor people in the world do not have enough to eat.

In 1961, South Korea, China, and India had very similar GDP per capita. Today, South Korea is a first world country, China is on the verge of being a 2nd world country, and India hopefully can solve large issues of poverty this decade, as it is doing. Political and economic systems do matter. In my view, China embracing export-oriented growth and private wealth has uplifted hundreds of millions from poverty over the past 30 years. Remember, China used to have periodic famines. Capitalism works where it is embraced.

Here is another central aspect of my thinking: 99% of the world that wakes up to go to work in the morning makes less than $35,000 per year. If you make $35,000 or more, you are in the top 1% of wage earners in the world. So I consider it extremely ironic to find the world's top 1% in income complaining about the top 1% in relation to themselves and not the world overall.

You might be in the top 1%. Check the calculator:

http://www.globalrichlist.com/

We've been working on a program called The Bitcoin Phenomenon for SQ1.tv.

In my view, the closest analogue to bitcoin as an asset is .com domain names, not a currency. Let me explain:

At heart, bitcoin is a protocol. Its initial value was derived from people speculating about its future. Bitcoins were virtually free to mine at its origin. Today, it is considerably harder to create this asset, a bitcoin. Additionally, there is a strong network effect forming the value of bitcoin...the more people that use bitcoin or play in the bitcoin ecosystem, the more valuable bitcoin is as a protocol and the value of each individual bitcoin grows as result.

Back in 1993, .com domains were free. You could register any .com for free. And almost all were available. The next year, Netscape Navigator was launched. And people could see the potential of the commercial web. And a nominal charge was added for registering domains. For one reason or another, the .com standard resonated with both consumers and businesses. Dot-com became synonymous with the web. Over time, the aggregate value of .com domains went through the roof as .com was the commercial standard. The only distinction is that some domains have more value than others whereas each bitcoin has the same value.

Similar to the supply constraint of 21 million, the number of memorable, pronounceable dot-com domains is limited. To find an unregistered .com of any commercial value is difficult, but not impossible; this is similar to mining today. And to those that suggest the supply constraint of bitcoin will hold back its commercial adoption, it should be noted that the scarcity of viable .com domains did not inhibit the growth of the commercial web.

In my view, bitcoin speculation is very similar to domain name speculation from 1994-1997. Its value is entirely predicated on the wide-spread adoption of the protocol.

Phinnaeus Gage! That is awesome, man. I just registered yesterday on here, but I have been following your posts as I was researching bitcoin. Glad to know you read ALL IN. It is coming back under the new owners by the way as poker is looking to get legalized state-by-state.

Thank you, LightRider. I visited The Venus Project. Looks interesting. Will look into it further with an open mind. But I do believe that capitalism is a pretty good system. And it allows for expression of human creativity and ingenuity in ways that all other systems do not. Even in the closest thing to a controlled experiment, we saw the difference between West Germany and East Germany at the point of unification. North Korea vs. South Korea today.

An earlier question posed to me:

------------------------------------------------------------------------
Quote from: gweedo on Today at 04:26:51 AM

What separates this from the other bitcoin movies? These are starting to blend all together. Also when is someone going to interview people from the community and just not all main people that we see all day everyday giving opinions.
______________________________________________________

Valid question, Gweedo. A couple of perspectives.

1. I used to publish a poker magazine called ALL IN from 2003-2006; during this period, there were all kinds of poker-related shows on channels from NBC, CBS, Travel, Fox Sports, ESPN, G4, to countless others. I can tell you that the proliferation of shows were a strong indication of the vibrancy of the underlying market. For bitcoin enthusiasts, the number of film and media projects focused on bitcoin should be a bullish signal. Yes, they blend together, but so what. I hope every film project is successful and fulfilling to its creators.

2. I'm not sold on bitcoin, especially not its larger claims. I'm 100%-intrigued by bitcoin as a phenomenon, but not sold with respect to its practicality or utility; I do root for all new things, though. As recently as April, I thought it was the "stupidest thing I had ever heard of." I was talking to a friend, whom I respect greatly, a top technology entrepreneur (who incidentally turned me onto the poker boom,) and I laughed at him when he was going on and on about the implications of bitcoin. I dismissed it for a couple of reasons:

---- a. I couldn't get my head around the arbitrariness of the initial value. The point at which it went from $0 USD to anything. What was that first person that paid some fraction of a government-issued currency speculating on?

---- b. The inflationary arguments that my friend made struck me as ironic. Japan has been in a deflationary trap for 20 years. Bond yields in the west, both US and Europe, were lower than low. Additionally, for all the talk about wild money printing, the problems in Europe among the PIGS (Portugal, Italy, Greece, and Spain) were not the result of hyper-inflation, but the opposite. The 4 European countries cannot get their hands on enough euros. This is because as a part of the euro framework, the euro countries have ceded their sovereign right to print currency to a currency union that includes Germany and France. As a result the countries with the highest rates of unemployment in developed world, the deepest recessions, and the most insolvent balance sheets are countries without the ability to print money or depreciate their currency. This was happening at the same time that Shinzo Abe of Japan was restoring optimism in Japan by promising to bring back inflation, which the market sometimes doesn't believe he will be able to do.

---- c. There seems to be a lack of understanding of the inverse function that applies to inflation - not all are impacted equally by inflation. A person that owes creditors $100,000 in car, student, home, and credit card loans is not impacted the same way a person that has $100,000 in the bank. If you've loaned somebody $100,000 for 5 years at a fixed rate of interest and a person borrows $100,000 for 5 years at a fixed rate of interest, when some climate of hyper-inflation strikes, the person that borrowed $100,000 can pay the original loan back with vastly depreciated dollars. In a sense, net debtors are significant beneficiaries as old debts become smaller in relation to current wage levels. Young people have debt. As such, young people benefit from inflation as the largest asset a young person has is the future income stream from wages; wages generally keep up with inflation...as such, a young person's most valuable asset, future wages, is inflation-protected while the debt is being paid off with cheaper dollars. While for retirees with savings from past efforts, the savings can be decimated by inflation as they have loaned money out in fixed income instruments. People that loan money for fixed time periods have the most to lose in inflationary climates, not young people with negative balance sheets. Inflation hurts lenders, it helps debtors.

(At a sovereign level, Japan is again an example. For instance, due to 20 years of deflation, Japan has debt-to-GDP of 240%...by far the highest in the developed world due to the value of past debts not depreciating due to inflation.)

Then it struck me what was cool about bitcoin. 24 hours after the conversation...4 images/thoughts flashed in rapid succession: Elliot Spitzer, Julian Assange, Online Poker, and drugs. Now, for some reason, bitcoiners seem embarrassed by this. For me, this is the most important aspect of bitcoin: Bitcoin counters a government's ability to suppress speech, behavior, or personal habits through regulation of the financial system. With Spitzer, his crime was not just engaging the services of prostitutes, but a crime called structuring - a form of money laundering, where one attempts to evade cash reporting rules. Wikileaks, we saw how the US was able to get Paypal, Mastercard, Visa to stop payment processing and suppress speech in a real sense. Online poker, which was enjoyed by millions of Americans was shut down using the banking and payment system (and domain seizures.) And people doing drugs is none of my business provided there is no harm to others. The seller of drugs pays a far greater price than the consumer of drugs even though both are guilty of equivalent "crimes". So then I thought about it this way:

1. As a proxy for freedom, bitcoin is wonderful. There is a need for a cash equivalent online. I buy it. And I wholeheartedly believe why the liberty-minded adopters of bitcoin feel this movement is so important. I don't feel it with the same intensity, but I am glad there are people out there that are on the front lines.

2. Bitcoin as a protocol is a solid aspect as well. Once the fiat vs. math-based arguments are stripped away, (which I find the least significant attribute), there are virtues to an efficient p2p payment protocol. I think of the future value of bitcoins as similar to that of domain names. Dot-com domains used to be free back in 1993, then as the browser took off, the names started getting value, some were used for businesses, others were speculative, but the value of domains grew as dot-com became the commercial standard. Now, dot-net domains have no less intrinsic value than dot-com domains, but the latter is considerably more valuable because it took hold commercially among consumers. This is how I feel with bitcoin vs. other virtual currencies. Bitcoin is the dot-com of virtual currencies. And as domain names grew in value, if bitcoin adoption takes off as a protocol like dns did, then yes, each bitcoin will gain in value in a similar way.

(Sub-point: Dot-com domains are also limited in a sense....there are only so many pronounceable and memorable combinations possible...and the bulk of valuable dot-com domains have been registered already...this is similar to the limited supply characteristics of bitcoin. People that argue that the limited supply of bitcoins will constrain bitcoin from mass adoption should consider that the limits of dot-com domains did not constrain the growth of the commercial web.)

This brings me to the premise of our program: Liberty vs. Protocol.

The early adopters were all for liberty, decentralization, anonymity, state subversion, and an unregulated currency. The new entrants, far more commercially minded, such as VCs and VC-backed entrepreneurs are looking to take bitcoin mainstream as a protocol. The latter do not care one iota about any of the former considerations...even if making bitcoin as big as it can be means a fully-regulated currency that sheds anonymity and decentralization.

I think of it as the Libertarian Paradox. This is where the interests of Libertarians diverges from the interests of Capitalists.

The more mainstream the currency, the more valuable each bitcoin becomes, but going mainstream will likely mean total compliance. Can bitcoin stay punk?

This is the central story that our production, The Bitcoin Phenomenon on SQ1.tv, is looking to dive into.

Thoughts?

Hello everyone -

We're producing a program called The Bitcoin Phenomenon for SQ1.tv.

We have a trailer up on SQ1.tv featuring Gavin Andresen, evoorhees, Trace Mayer, Peter Vessenes, a top VC, Angela Keaton from Antiwar.com, Roger Ver, and several VC funded entrepreneurs.

Trailer & Write-up: http://www.kickstarter.com/projects/sq1/the-bitcoin-phenomenon-on-sq1tv

About SQ1.tv: http://www.sq1.tv

Like it, share it, tweet it if you actually like it. Feedback is welcome. Full interviews on the state of bitcoin from most of the participants will follow soon.

Sincerely,

Bhu

Valid question, Gweedo. A couple of perspectives.

1. I used to publish a poker magazine called ALL IN from 2003-2006; during this period, there were all kinds of poker-related shows on channels from NBC, CBS, Travel, Fox Sports, ESPN, G4, to countless others. I can tell you that the proliferation of shows were a strong indication of the vibrancy of the underlying market. For bitcoin enthusiasts, the number of film and media projects focused on bitcoin should be a bullish signal. Yes, they blend together, but so what. I hope every film project is successful and fulfilling to its creators.

2. I'm not sold on bitcoin, especially not its larger claims. I'm 100%-intrigued by bitcoin as a phenomenon, but not sold with respect to its practicality or utility; I do root for all new things, though. As recently as April, I thought it was the "stupidest thing I had ever heard of." I was talking to a friend, whom I respect greatly, a top technology entrepreneur (who incidentally turned me onto the poker boom,) and I laughed at him when he was going on and on about the implications of bitcoin. I dismissed it for a couple of reasons:

---- a. I couldn't get my head around the arbitrariness of the initial value. The point at which it went from $0 USD to anything. What was that first person that paid some fraction of a government-issued currency speculating on?

---- b. The inflationary arguments that my friend made struck me as ironic. Japan has been in a deflationary trap for 20 years. Bond yields in the west, both US and Europe, were lower than low. Additionally, for all the talk about wild money printing, the problems in Europe among the PIGS (Portugal, Italy, Greece, and Spain) were not the result of hyper-inflation, but the opposite. The 4 European countries cannot get their hands on enough euros. This is because as a part of the euro framework, the euro countries have ceded their sovereign right to print currency to a currency union that includes Germany and France. As a result the countries with the highest rates of unemployment in developed world, the deepest recessions, and the most insolvent balance sheets are countries without the ability to print money or depreciate their currency. This was happening at the same time that Shinzo Abe of Japan was restoring optimism in Japan by promising to bring back inflation, which the market sometimes doesn't believe he will be able to do.

---- c. There seems to be a lack of understanding of the inverse function that applies to inflation - not all are impacted equally by inflation. A person that owes creditors $100,000 in car, student, home, and credit card loans is not impacted the same way a person that has $100,000 in the bank. If you've loaned somebody $100,000 for 5 years at a fixed rate of interest and a person borrows $100,000 for 5 years at a fixed rate of interest, when some climate of hyper-inflation strikes, the person that borrowed $100,000 can pay the original loan back with vastly depreciated dollars. In a sense, net debtors are significant beneficiaries as old debts become smaller in relation to current wage levels. Young people have debt. As such, young people benefit from inflation as the largest asset a young person has is the future income stream from wages; wages generally keep up with inflation...as such, a young person's most valuable asset, future wages, is inflation-protected while the debt is being paid off with cheaper dollars. While for retirees with savings from past efforts, the savings can be decimated by inflation as they have loaned money out in fixed income instruments. People that loan money for fixed time periods have the most to lose in inflationary climates, not young people with negative balance sheets. Inflation hurts lenders, it helps debtors.

(At a sovereign level, Japan is again an example. For instance, due to 20 years of deflation, Japan has debt-to-GDP of 240%...by far the highest in the developed world due to the value of past debts not depreciating due to inflation.)

Then it struck me what was cool about bitcoin. 24 hours after the conversation...4 images/thoughts flashed in rapid succession: Elliot Spitzer, Julian Assange, Online Poker, and drugs. Now, for some reason, bitcoiners seem embarrassed by this. For me, this is the most important aspect of bitcoin: Bitcoin counters a government's ability to suppress speech, behavior, or personal habits through regulation of the financial system. With Spitzer, his crime was not just engaging the services of prostitutes, but a crime called structuring - a form of money laundering, where one attempts to evade cash reporting rules. Wikileaks, we saw how the US was able to get Paypal, Mastercard, Visa to stop payment processing and suppress speech in a real sense. Online poker, which was enjoyed by millions of Americans was shut down using the banking and payment system (and domain seizures.) And people doing drugs is none of my business provided there is no harm to others. The seller of drugs pays a far greater price than the consumer of drugs even though both are guilty of equivalent "crimes". So then I thought about it this way:

1. As a proxy for freedom, bitcoin is wonderful. There is a need for a cash equivalent online. I buy it. And I wholeheartedly believe why the liberty-minded adopters of bitcoin feel this movement is so important. I don't feel it with the same intensity, but I am glad there are people out there that are on the front lines.

2. Bitcoin as a protocol is a solid aspect as well. Once the fiat vs. math-based arguments are stripped away, (which I find the least significant attribute), there are virtues to an efficient p2p payment protocol. I think of the future value of bitcoins as similar to that of domain names. Dot-com domains used to be free back in 1993, then as the browser took off, the names started getting value, some were used for businesses, others were speculative, but the value of domains grew as dot-com became the commercial standard. Now, dot-net domains have no less intrinsic value than dot-com domains, but the latter is considerably more valuable because it took hold commercially among consumers. This is how I feel with bitcoin vs. other virtual currencies. Bitcoin is the dot-com of virtual currencies. And as domain names grew in value, if bitcoin adoption takes off as a protocol like dns did, then yes, each bitcoin will gain in value in a similar way.

(Sub-point: Dot-com domains are also limited in a sense....there are only so many pronounceable and memorable combinations possible...and the bulk of valuable dot-com domains have been registered already...this is similar to the limited supply characteristics of bitcoin. People that argue that the limited supply of bitcoins will constrain bitcoin from mass adoption should consider that the limits of dot-com domains did not constrain the growth of the commercial web.)

This brings me to the premise of our program: Liberty vs. Protocol.

The early adopters were all for liberty, decentralization, anonymity, state subversion, and an unregulated currency. The new entrants, far more commercially minded, such as VCs and VC-backed entrepreneurs are looking to take bitcoin mainstream as a protocol. The latter do not care one iota about any of the former considerations...even if making bitcoin as big as it can be means a fully-regulated currency that sheds anonymity and decentralization.

I think of it as the Libertarian Paradox. This is where the interests of Libertarians diverges from the interests of Capitalists.

The more mainstream the currency, the more valuable each bitcoin becomes, but going mainstream will likely mean total compliance. Can bitcoin stay punk?

This is the central story that our production, The Bitcoin Phenomenon on SQ1.tv, is looking to dive into.

Thoughts?
 

First post. We just completed the major filming of The Bitcoin Phenomenon for SQ1.tv.

Trailer is up on SQ1.tv (pronounced "square one"):

http://www.sq1.tv

We were able to get perspectives from Gavin Andresen - bitcoin's lead dev, Erik Voorhees - formerly of Satoshi Dice, Peter Vessenes, Trace Mayer, and many entrepreneurs representing companies such as Coinbase, CoinLab, Coinsetter, Buttercoin, and venture capitalists on the allure of bitcoin.
 
The full program is slated for release this fall for the launch of SQ1.tv.