By Jake Redmill
Transaction fees, waiting time and overdrafts are just a few of the inconveniences our modern centralized banking system presents to us today. Inflation continues, and to the layman of economics, the rate of inflation seems arbitrary.
Today a global movement is well underway. This movement is saying that those old problems do not have to be tomorrow’s reality in business, and a new way has emerged that could make the current banking system obsolete. This movement is Bitcoin and it is alive in SE Portland.
Bitcoin is a cryptocurrency gaining popularity around the world as well as here. The electronic monetary system is only a few years old, dating back to 2009.
A Portland area group of people, business owners and consumers, meet every other Tuesday at Madison’s Grill. People who are using it claim there are many advantages – but first, what is this currency?
Bitcoin is electronic currency created by computer devices solving complex mathematical problems. This is the process known as ‘mining’. Ultimately only 21 million Bitcoins will ever be created which means that inflation would be limited and predictable.
As of October of 2013, there are approximately 11.85 million in existence. As mining occurs, Bitcoins emerge into existence as codes – complex mathematical codes that are next to impossible to steal or guess.
This is how users can say that the currency is safe to use, because it cannot be duplicated and given to two different parties from one person at the same time.
This is an advantage over our current banking system. If one withdraws money from his or her checking account, and doesn’t properly record it, those same funds could be spent in another transaction, even though the actual money for that later transaction has already been spent. This is not true in the case of Bitcoin.
“Each block of code is like the little strip (the anti-counterfeit device) in a U.S. bill of currency. The codes that make up Bitcoin currency are the verification,” James Pella, sales manager at Free Geek, explains. Because each string of code is actual currency, it cannot be counterfeited.”.
Portland businesses are accepting Bitcoin, and many say that it is much better than accepting a credit card. Free Geek accepts Bitcoin and, as Pella explains, “Coinbase (a digital ‘wallet’) doesn’t charge a fee for the first million dollars of sales.”
After that, the charge is one percent. When the transaction occurs, a business owner can select the option with Coinbase to immediately change the Bitcoin currency to U.S. Dollars and put that into an account.
Another advantage Bitcoin has: there is no middleman. This causes transactions to move more smoothly, quickly and with less fees.
Ben L. Galvin, Bitcoin user and attendant at the meeting at Madison’s Grill claims it’s much better than the current banking system.
“It’s a frictionless payment system. Say you wanted to send money to Japan. You would go to someplace like Western Union. They would take a fee, and don’t forget that banks are closed on Sundays. So, it could take a few days to get there. The money we use is already electronic. Why can’t I send my money to Japan in a moment’s time? I can do this using Bitcoin.”
Galvin’s comment could be verified by anyone attending the meeting. A transaction is simple, and can be done to pay for one’s drink or meal at Madison’s Grill.
Once a wallet account is set up, it has an address and is given a QR code. The QR code can be scanned, just by taking a picture of it with a phone camera. Transfer time is short and the transaction is irreversible.
The inevitable question comes to mind: how can it be honored? It’s not the Euro, Dollar, or the Yen. What makes it real?
Galvin explains it well: “It’s just like stored energy. If you carried a rock to the top of a skyscraper, you could wait years before pushing it off the roof, but when you do, the impact that rock would make is testimony that energy was placed in carrying it to the top of the building at one point in time. Currency is like that. It’s just stored value.”
The topic of currency is complicated, but the discussions about Bitcoin tend to get people to visit the core of what trade is in the first place – it puts everyone back to the pioneer philosophy of trade.
At a meeting where Bitcoin is under discussion, someone would see a wide spectrum of people – from revolutionary-minded to people who treat it like stock. Bitcoin takes the public back to discussions of the core tenets of economics and is a global phenomenon gaining popularity right here.
Currently the following businesses in Portland accept Bitcoin: Madison’s Grill, Whiffies Fried Pies, Free Geek, Pacific Solutions, Mirador Community Store, Float On, and Medicina Massage & Bodywork.
For more information about this monetary system there will be two meetings this month, November 12th and 26th, 5 pm at Madison’s Grill, 1109 SE Madison, 503.230.2471.