Holmes Report 02 Jul 2014 // 8:14PM GMT
[quote]The real breakthrough is that Bitcoin decentralizes consensus.[/quote] By Benjamin Gorelick Why would a PR firm decide to accept Bitcoin as payment? For the same reasons any legitimate business would. It’s easy to use, convenient and it costs nothing. But there’s more in it than that for those of us with a passion for both technology and communications. [caption id="attachment_2567" align="alignright" width="209"] Benjamin Gorelick[/caption] Though we’re still very much in the early stages of awareness and adoption, thousands of organizations have already embraced Bitcoin. Examples include Expedia and the Dish Network, which take payment in Bitcoin, and Khan Academy, which accepts Bitcoin donations (as can Political Action Committees, as of an FEC ruling). But PR firms, particularly those representing the technology sector, should be especially excited about Bitcoin – not only as a shot of adrenaline for the ecommerce space, but also because of the coming wave of innovation thanks to what Bitcoin makes possible. Bitcoin has a fascinating story. It’s use as a payment system is only one of many possible applications. The real breakthrough is that Bitcoin decentralizes consensus – it creates a network of global scale in which millions of users can agree on the state of information in the network in real time, at all times. It’s this idea that makes it possible to know, without the need for third party guarantee, that money sent will find its recipient, and money paid will be received. Bitcoin enables “trustless” trade: the ability to do business or exchange value without the need to trust that others’ obligations toward you will be fulfilled. Users need only trust the integrity of the “blockchain” – the public ledger of every single transaction that takes place on the network. Bitcoin has a democratic flavor to it, a way of flattening and spreading responsibility for decision-making across users without the need for intervention or oversight. Every user has a copy of the blockchain which is stored locally and updated automatically with new transactions. All network participants must agree that a transaction has occurred before it is added to the blockchain. This makes it incredibly difficult to falsify or interfere with transactions, as any information that does not match the consensus is rejected. This process of confirming transactions takes computing power, which isn’t free. Bitcoin as currency is paid as an incentive to reward those providing the computing power. These “miners” keep the network running and its transactions secure. Bitcoin’s long-term value is therefore tied to the value that users derive from the network itself, which, according to theories like Metcalfe’s law, increases exponentially as users join the network. For example, even before Facebook figured out how to monetize mobile ads effectively, people still believed that the network was inherently very valuable. This is still an abstract idea, but it is actually elegantly simple, and far more tangible than most people imagine. We’re seeing a glimpse of what it can do for the global payments industry, and how Namecoin – an application built on top of Bitcoin – is providing an alternative, decentralized Domain Name System (DNS). Just think about the other possibilities the technology could offer in applying it to organization-specific missions, to contracts, or even to voting or creating law. It’s not possible to tell Bitcoin’s story in a single article. It can seem complicated and many people may have doubts about how to integrate it into their business. But that’s exactly why PR firms need to be in this space – helping the fresh crop of Bitcoin innovators and visionaries tell their stories, and proving the potential of “Bitcoin the platform” through their successes. There are a lot of companies working to make it easier for businesses to accept and use Bitcoin. There are people who have Bitcoin and want to spend it. Others are working on revolutionary ideas that could change the way business is done. It would be shortsighted for PR firms not to come along for the ride. Benjamin Gorelick is account director at Spector & Associates based in New York.