Bitcoin’s next big step
Friday, 22 February 2019
By Sam Volkering
- We’re not writing about cyber attacks today
- Thanks for the link, Jack
- Down the lightning rabbit hole
The idea this week was to write about the pervasion of Australia’s electoral system by foreign ‘state actors’.
At first you’d think that foreign ‘state actors’ would be some of Hollywood’s A-listers. Pervasion of our electoral system from Tom Hanks, Dwayne Johnson or Charlize Theron.
But in this instance, it’s referring to foreign cyber attackers. And the suspicion is these attackers are from China. Conveniently, this adds to the current anti-Chinese rhetoric that seems to be coming from the mainstream media.
Nonetheless, if you’re a half-smart investor you’ll know that Australia’s future economic success or failure is inextricably linked to China, not the US. And if the decision really came to choose sides, it would be an irresponsible government that sided with the Americans.
Just something to sit on and think about.
But as I allude to above, I was planning on writing about this cyber attack on Australia’s electoral system. However, that will have to wait until next week.
You see I found myself a little distracted today. I started playing around with something on Twitter, then my phone, then my computer. Something that has solidified even further about the future of cryptocurrency and bitcoin.
And once you see what’s possible, I think you’ll be as convinced too.
First, the markets…
Overnight the Dow Jones Industrial Average closed down 103.81 points, or 0.40%.
The S&P 500 lost 9.82 points, or 0.35%.
In Europe, the Euro Stoxx 50 index finished up 4.21 points, or 0.13%.
Meanwhile, the FTSE 100 fell 0.85%, and Germany’s DAX gained 21.31 points, or 0.19%.
In Asian markets, Japan’s Nikkei 225 is down 64.93 points, or 0.30%. China’s CSI 300 is up 0.078%.
In Australia, the S&P/ASX 200 is up 28.60 points, or 0.47%.
On the commodities markets, West Texas Intermediate crude oil is US$56.85 per barrel. Brent crude is US$66.89 per barrel.
Turning to gold, the yellow metal is trading for US$1,324.75 (AU$1,868.06) per troy ounce. Silver is US$15.83 (AU$22.32) per troy ounce.
One bitcoin is worth US$3,918.11.
The Aussie dollar is worth 70.90 US cents.
Jack be nimble, Jack be quick
I use Twitter a fair bit these days. In fact, it’s one of my primary sources to find the news streams that are of interest and relevant to me.
It’s not that I get my information from Twitter specifically. There’s a lot of people sprouting utter rubbish on there a lot of the time. Myself occasionally included! But often people will link out to reports, articles, research, other information around the web.
In that sense I’m very particular about the people I follow. It includes scientists, futurists, researchers, developers, CEOs, even certain politicians (shock, horror). The point being, a well cultivated following list can bring you to information that you might otherwise miss if you only get info from mainstream ‘news’ sources.
I’d recommend getting more involved on Twitter for this purpose, if you don’t already. Use it as an information feed that prompts you to dig deeper and reach further.
Anyway, this morning (Thursday morning UK time) I was browsing through my feed and came across a tweet from @jack.
Now you might not know, but @jack is the Twitter handle for Jack Dorsey, the CEO of Twitter [NYSE:TWTR] and payments company Square [NYSE:SQ]. Recently, Jack has started to get more vocal about his views and beliefs surrounding bitcoin as a global payments network.
In a recent tweet he said the only cryptocurrency he holds is bitcoin. And then in a report by The Times, Dorsey also said,
‘The world ultimately will have a single currency, the internet will have a single currency. I personally believe that it will be bitcoin’
The tweet I saw this morning was Jack linking to a Medium article titled, ‘Tippin, a game changer application’. Along with the link, Jack had tweeted, ‘This is excellent @tippin_me’
I was intrigued.
So naturally I went to the Medium article to read what this game changing application was all about. And then I dove right down the rabbit hole.
Bitcoin doesn’t have to be expensive
Tippin is a new application that allows you to ‘tip’ people on Twitter. What that means is if you like someone’s tweet you can tip them, much like you’d tip wait staff at a restaurant if you were happy with their service.
This tweet-tipping though is facilitated through Bitcoin.
For example, let’s say you post a tweet that says, ‘The Aussie government are an incompetent kakistocracy’ and perhaps you link to a Medium post you’ve written about their failures.
Let’s say I like your tweet and the article. And rather than just like it and retweet it, I decide to tip you some bitcoin for it. Using Tippin I can just click on a little lightning icon by your tweet and then instantly (and cheaply) send you some bitcoin.
There’s a good reason why this is a game changer, too.
It’s because Tippin uses the Lightning Network. The Lightning Network is kind of like a bitcoin blockchain sidecar. It sits alongside the bitcoin blockchain — off-chain — enabling smart contracts to make lightning fast (hence the name) bitcoin payments, safely and securely. This interacts with the bitcoin blockchain to create the ‘enforceability’ and certainty of bitcoin’s blockchain.
It gets more technical than that. In reality, the technical aspect of it is a moot point for widespread adoption. What’s important to understand is that it works. And it makes bitcoin transactions fast and cheap. Fast and cheap are two things that bitcoin traditionally isn’t known for.
Lightning Network enables bitcoin to have all the potential as a true global currency. And Tippin is one of the first widespread, mass market available applications that makes it happen.
Now I just had to try this out. I needed to see this for myself. That meant allowing Tippin app access to Twitter and installing an extension on my Chrome browser. I then installed a lightning enabled bitcoin wallet on my phone, the Eclair Mobile wallet. And I added a fraction of some bitcoin to the wallet.
After registering with Tippin I had my own Tippin address and QR code that people could tip me with. Ready to go.
Then using my Eclair mobile wallet, I scanned my Tippin QR code, and tipped myself!
What was incredible about this was I sent just 0.0000150115 BTC (roughly 6 US cents) in a tip and it cost me just 1 sat in fees.
Let’s break that down for you. 1 sat is the equivalent of 0.00000001 BTC. It’s the lowest denomination of bitcoin you can get. At current fiat-converted USD prices 1 sat equals 0.00003958 US cents. In percentage terms it cost me a transaction fee of 0.000659%.
And it was instant.
This is the kind of feature that bitcoin needs to properly scale to the masses. Where you can make a payment in a shop and have it occur instantly. Where there’s a fee, but not like the kinds of single digit percentage fees that banks charge merchants.
It’s a payment system that costs fractions in the millionths.
With Tippin we’re looking at an application that’s available for all of Twitter’s 326 million monthly active users. That’s the kind of reach that bitcoin’s heading towards with the capabilities of developments like the Lightning Network.
That is the next massive leg up that’s going to drive the next great bitcoin boom. Bitcoin is far more than just ‘digital gold’ that many claim. It is a new kind of asset that can be a store of value, a unit of exchange, it can create value, transfer value and function as a borderless financial instrument.
It’s so diverse and packed with potential that I also agree with Dorsey that it’s got the potential to be the world’s single currency. I also believe it’s developments like the Lightning Network that are going to make bitcoin worth exponentially more than it is today.
If bitcoin does end up being used by hundreds of millions of people, then billions of people, it will be insanely scarce. People who own whole bitcoin will be a rarity. That’s still a few years away. But if you want to be one of those future elite that have an entire bitcoin, I’d be seriously thinking about getting as much as you can, while you can.
You simply might not have another chance to get bitcoin at reasonably affordable levels again.