What is Bitcoin and what is all the fuss about?

Whilst the term Bitcoin is pretty well recognised, the meaning behind it and the current and future potential is often lost in the hysteria, buzz and scandals. One of the other thing that holds it back and creates a certain amount of fear, uncertainty and doubt is it is confusing as heck!

So let’s dig into what it is in a way I hope makes sense, then look at some of the challenges and meet BottlePay, a company that is trying to solve some of those gnarly challenges.

Precious bits and metals

I think most of us understand that gold has a value, and the reason its value continues to be used as a measure of wealth is because gold is a scarce and in limited supply. The same is true for other precious metals like platinum, copper and cobalt.

Cobalt’s price rocketed recently because it is a key component for batteries, and with the growth in electric vehicles, the demand for the material has never been higher.

The astute reader might see that whilst the price soared, it then crashed. Why? When a something with a limited supply is becoming a necessity and demand is growing, people hoard as much as they can with the intention of selling it when prices have risen enough, and this is exactly what happened with cobalt.

Interesting, but how does this relate to Bitcoin?

Skip to BottlePayAll these metals have to be mined out of the ground, and until we find a way to mine asteroids, the total amount available to us on our planet is limited. If something is rare (supply) and people want it (demand) then prices generally rise – think about trying to find a decent hotel and flight for a sensible price in school holiday times.

Bitcoin has very similar characteristics to precious metals. It is in limited supply and demand is growing, hence the price is growing too.

In other similarities to precious metals, and indeed precious gems, sometimes there are events that cause the price to vary significantly. In the early 2000’s there was a pricing scandal in the diamond industry which sent the price of the precious gem crashing, wiping hundreds of millions of dollars out of the market. Interestingly, as I write this article diamonds are reported to have hit another price ceiling, seeing the first significant downturn in value for fifteen years.

Gold also has had it’s ups and downs as the two charts below show (charts are from an awesome site that allows you to explore historical values).

Bitcoin’s price is notorious for its rapid changes in value, its volatility. What is interesting to see is how similar the shape of the chart is to gold, and this is not so much of a surprise. This a fairly common characteristic during the maturation of a new money system.

How much!?

Yes, you did read that right, one Bitcoin is currently worth more than seven thousand pounds! And yes, it was once worth nearly double that.

The volatility in pricing and the shear value of a Bitcoin are two of the biggest ‘scare-offs’ that Bitcoin faces today.

Complexities, scandals and price.

Go to BottlePay’s answerFor the average person living in a relatively stable economy, Bitcoin seems far to complex and risky to get involved in. After all, it is so very easy to take paper notes out of an ATM and walk around with real money that I can hold and touch. Bitcoin’s not necessarily that easy, and even if it was, I might worry that the “paper Bitcoin” in my pocket might devalue so much as to make it worthless by the time I walked from the cash machine to the shop – equally, it might increase so much in value that when I get to the shop I can buy it!

Important note. None of my blog is anything close to investment advice, but hopefully you understood that already! 🙂

But if you live in a country where the local currency is potentially a far more risky investment, such as Venezuela, South Africa or Turkey, then the risk of Bitcoin might not seem so bad.

Also, in countries where the governments might be involved in complex geo-political activities, locals might want to find a way to store their wealth somewhere the governments can’t control or access. Many residents of these politically unstable countries are, indeed, choosing to move some of their wealth to Bitcoin today.

They say there’s no such thing as bad press, but scandals tend to sting. And Bitcoin has had quite a few, but the details of these are often missed or are far too complex to understand.

That’s another fear factor of Bitcoin. Complexity. If you’re reading my blog, then the chances are complexity isn’t really something you relish. If you want to know more, click the text box below, if not skip straight on to how it all gets a bit easier with BottlePay.

Where is Bitcoin going next?

New money systems typically go through a number of evolutionary stages which can be broadly categorised as follows:

• Collectable: Something you can exchange existing money against, but holds no intrinsic value other than what others might be prepared to offer you for it. Imagine the kinds of sport memorabilia you can find on eBay.
• Store of Value: Something you can exchange for existing money that will retain some level of worth over time, like gemstones and fine wine.
• Medium of Exchange: Whilst gemstones and wine might hold value, it would be quite inconvenient to carry them around to use as a form of payment for your shopping. A medium of exchange is when the new-money is accepted as a representation of the stored value. E.g. one new-money is worth one bottle of fine wine. 
• Unit of Account: At this stage, the money is detached from the underlying asset, like fine wine or gemstones and becomes the thing that others things are measured and valued against. The US Dollar moved to this stage when it stopped being tied to the value of gold.

Bitcoin is maturing to a medium of exchange

Having demonstrated it can be a store of value, Bitcoin is currently somewhere between the second and third stages, and is already becoming more generally accepted as a medium of exchange. BottlePay is helping accelerate this, by making it easier and more familiar to exchange Bitcoin for the things you want. Read more below to find out how.

Already bigger than the Australian or Canadian Dollar

There’s a really interesting (albeit rather complicated) article that talks about how Bitcoin stacks up against other money systems. According to their latest study (completed March 2019), if you exclude gold and silver, Bitcoin is the 10th largest monetary system on the planet today. That makes it bigger than the currencies of Taiwan, Mexico, Australia and  Canada. Even more interesting is that in 2015 it didn’t even compare, by 2016 it was ranked 31, reaching 19th place in 2018 and now 12th (or 10th if you exclude gold and silver).

BottlePay – Making Bitcoin more accessible

If we were to take away the scandals and complexity, Bitcoin is like many other forms of money we’re already familiar with today – it’s something whose value is based on scarcity, supply and demand, which leads to price fluctuations and a market place fit for trading and exchange.

One of the big barriers still in the way is how difficult it is to use, and this is what the company I spoke to for this article is trying to solve.

BottlePay is trying to make Bitcoin familiar and accessible for the masses.

One billion new users

BottlePay’s lofty ambition is to introduce 1,000,000,000 new users to Bitcoin over the next five years. If they are able to achieve this, they could bring financial capability to half of the population in this world that don’t have access to mainstream financial services (otherwise known as the 2 billion people who are underbanked or unbanked).

Achieving this kind of scale can only be done through simplicity and social recommendation.

Whilst BottlePay‘s approach to achieving this has ruffled a few feathers amongst the Bitcoin purists, they aim to make sending and receiving Bitcoin as simple as sending a Tweet or a posting a photo to Instagram. Additionally, by using new technology (known as Lightning) they can speed up the processing of individual transactions, and also significantly reduce the costs.

Tweet Satoshis straight to your wallet

Since a single Bitcoin’s value can be so astronomical, most Bitcoin transactions (apart from this one as an example) are for minute fractions of a Bitcoin. The fraction BottlePay uses is known as a Satoshi, or Sat, which is one one hundred millionth of a Bitcoin.

Whilst this makes the real-world conversion of a Satoshi to, let’s say GBP something like 10,500 Sats per Mars bar, it feels more familiar to deal with multiples of whole numbers rather than minute fractions of small numbers.

What do you think? Does 10,500 Sats feel more familiar than 0.000105 Bitcoin? For me it does, albeit it might initially seem somewhat pricey for a Mars bar, but that’s London prices for you! 😉

Now we can talk about Bitcoin in an easier way, how do I store them? BottlePay uses what the techies call a custodial system, but we can think of it as a wallet. E.g. somewhere you can easily store and access your dosh without having to remember an impossible string of characters. Again, custodial wallets isn’t something I’ll go into in detail, but happy to take questions.

Coffee satoshi

Let’s assume you bought me a coffee (thank you, double espresso please) and I wanted to pay you back using BottlePay, it’s as easy as sending me a Tweet or sending me a Telegram.

How to send me some coffee money

If you enjoyed this post, and want to send me little slice of Bitcoin, simply link your Twitter account to BottlePay at https://bottle.li/twitter (it’s so simple!) then send a Tweet like this:

• To send me Satatoshis, tweet: @BottlePay send 1000 sats @1nterestingTech
• To send me £5, tweet: @BottlePay send 5 GBP @1nterestingTech
• To send me $5, tweet: @BottlePay send 5 USD @1nterestingTech

 

Micropayments

Now we can talk about, and therefore comprehend small amounts of money, after all a fifth of a Mars bar is still more than two thousand Sats, and we can move that from one person to another, quickly and easily, with a fee structure that doesn’t make small transactions prohibitive, many new things can happen.

In countries like India where the average daily wage is a few Dollars a day, every transaction is for a fraction of a Dollar. Helping populations like India’s exchange value more easily and efficiently will create new possibilities for a very large number of people.

There are many other interesting usages for micropayments, including for media, donations, subscriptions, streaming media, but also for machines talking to machines as part of the Internet of Things (IOT).

Exciting times ahead

BottlePay is still relatively new, but growing at a phenomenal rate. Each week more than two thousand new BottlePay wallets are created. There is still some way to go to reach the 1 billion users they aspire to, but since nearly all of their growth is through social recommendation this growth could rapidly accelerate.

The team at BottlePay have created a platform that helps over come some of the challenges of Bitcoin by leveraging familiarity, focusing on ease of use and allowing users to propagate the network without hinderance. BottlePay is the first application built on their platform, but they envision other applications covering media rights, Internet of Things (IOT) applications, monetisation of your own personal data and others.

All of this will help Bitcoin move to the next stage of its evolution, and with their existing integrations and native mobile applications that will come later this year, BottlePay is on a rapidly accelerating path to make a big difference to Bitcoin’s global significance as a money system.

To keep up to date with BottlePay’s growth and developments follow them on Twitter and Telegram or contact them via their website or if you are a developer, email them at hello@bottle.li for an invite to their API.

In to the future.

Recently I was talking at a conference about “Who Controls The Future, Man or Machine” and crypto currencies along with BottlePay was be part of the discussion. I think what they are doing to make the unfathomable world of Bitcoin familiar and accessible will be part of exponential times of our near future.