Old vs. New and The Debate About Bitcoin
A few weeks ago a I wrote a post titled It’s Not Right vs. Left, It’s Old vs. New about the conflict between innovators and incumbents. As a society, we are just starting to wander into the real structural conflict around this and I don’t believe our government, either at the local, state, or federal level, really knows what to do about it, or how to effectively engage in it.
If you want a magnificent example of this, all you need to do is look at what’s going on with Bitcoin. Actually, you just need to read two relatively short “open letters” which appeared on the web this morning.
First, read U.S. Senator Joe Manchin (D-W.Va.) letter asking regulators to ban Bitcoin.
Now, read Fred Wilson from USV’s blog post A Letter To Senator Manchin where he explains how regulatory activity in the US is already inhibiting innovation around Bitcoin, rebuts Manchin’s perspective, and analogizes Bitcoin to the Internet.
It’s probably no surprise that I completely agree with Fred’s perspective.
For disclosure, I don’t have much of a financial stake in this game – I own slightly less than 20 Bitcoins (I’ve used fractions to buy some stuff), have no intention to be a Bitcoin trader (I don’t actively trade individual public company stocks or currencies either), and I don’t have a direct equity investment in any company around the Bitcoin ecosystem (although I have several investments in VC funds who do.) I originally bought the Bitcoins for the Coursera course Startup Engineering which I managed to get through the fourth week of before I couldn’t make enough time to keep up with it. I thought I’d bought 10 but was surprised to see a few months ago that I had 20.
While I don’t have a financial stake, I have a huge intellectual and emotional stake in this. Bitcoin is a fascinating innovation. It has the potential to transform a number of different things, where fiat currencies and payment mechanisms are merely two of them. As a computer science problem, Bitcoin is a fascinating one. And, as an innovation vector, it’s a great example of “new” in a world that is desperately trying to hold on to “old.”
We are going to have a very rocky road as a society over the next 40 years. As with every generational shift, there is a lot of disruption (the 1960’s immediately come to mind.) But the amount of change, pace of change, democratization of innovation and entrepreneurship, connectivity of communication around the world, and intellectual complexity of the new innovations being created will dwarf anything we’ve seen as a species since our first moments of sentience.
Bitcoin is just a visible 2014 example of this. As Fred says at the end of his post
“When something as new and as different as Bitcoin emerges, it is tempting to want to “put the Genie back into the bottle” and protect ourselves from it. But thankfully the US did not do that with the Internet. The impact of the commercial Internet on the US economy and our society as a whole has been massive and overwhelmingly positive over the past twenty years. We should approach Bitcoin in exactly the same way and if we do, I expect the benefits we will see will be equally important, impactful, and beneficial to our economy and our society.”
My message to all the incumbents out there is a simple one. The more you try to organize and control “the new”, the harder it is going to be on society. The new is going to route around things, just like the Internet routes around things. Rather than fight innovation, embrace it, encourage it, iterate on it, accept the mess of it, and play with it, rather than against it. It’s more fun and will serve us better in the long run.