Wednesday, April 06, 2011

Thirty-five dollar wires

We'll be in France for a couple of weeks next month, and paying for the house we're renting has involved three trips to the bank and will cost $35 (plus whatever costs are hidden in the exchange rate).

Granted, a couple of those trips to the bank wouldn't have been necessary if we'd gotten everything exactly right the first time. But still... I found myself thinking "paying for this using bitcoins would be SO much easier and less expensive."

Maybe paying for vacation rentals in other countries will be one of the "killer applications" for bitcoin; I bet vacation property owners are the kind of small entrepreneur that might like to cut out the credit card or bank middle-men.

Saturday, April 02, 2011

The Wise Leader fallacy

I've been thinking a lot lately about taking Bitcoin mainstream. Right now, most people interested in a "nobody in charge pseudo-anonymous" internet currency are libertarians and the techno/crypto crowd.

People like me. Which makes me wonder: are my biases making me think Bitcoin is a technology destined for greatness?

If I play Devil's Advocate and try to think of what might prevent Bitcoin from going mainstream, I think the biggest barrier might be a widespread belief in the Wise Leader Fallacy (which is a form of argument from authority).

We tend to reward and blame our leaders for things that are completely out of their control. If the economy is doing badly-- fire the President. If the baseball team did great during the regular season but got swept in the playoffs-- fire the manager. I think we have a strong need to feel like somebody is in control, whether that somebody is our King or our President or our God.

The idea that wise men are in control of our money is, I think, comforting for most people who believe that our economy can be steered towards stability. They will smooth out the natural ups and downs, making the economy heat up when it is getting too cold and cool down when it is getting too hot.

Combined with people's natural risk aversion and suspicion of anything new, I wonder if that will be enough to prevent people from using bitcoin. "If it ain't broke, don't fix it" is a good rule of thumb; maybe bitcoins will only become mainstream in places where the monetary system is obviously broken.