From East of Eden:
“Say, Carlton, how do you go about telegraphing money?â€
“Well, you bring me a hundred and two dollars and sixty cents and I send a wire telling the Valdosta operator to pay Adam one hundred dollars.â€
This particular bit of East of Eden (which is excellent, quite apart from this particular issue) is set in the late 19th century. The charge for wiring money was 2% plus $0.60. This was at a time when messages were sent by hand from operator to operator (i.e. a network of full time employees) along wires that had no uses other than sending these simple messages (so there was no possibility of amortising the cost). Accounting would have to be done by hand on paper; and only rudimentary security schemes were possible (in East of Eden, a “secret question†is sent along with the money order).
Of course, we’ve moved on since then haven’t we? Why, I can send an encrypted message around the world in the blink of an eye, for effectively zero marginal cost. I can do this from anywhere I can get a mobile signal. If I were a giant corporation with economies of scale and access to the most sophisticated computing and networking facilities in all human history, I could beat those pathetic Victorian-era technologies without even blinking, right? Wrong.
Purchase payments received (monthly) Fee per transaction
-------------------------------------------------------------
£0.00 GBP - £1,500.00 GBP 3.4% + £0.20 GBP
£1,500.01 GBP - £6,000.00 GBP 2.9% + £0.20 GBP
£6,000.01 GBP - £15,000.00 GBP 2.4% + £0.20 GBP
£15,000.01 GBP - £55,000.00 GBP 1.9% + £0.20 GBP
above £55,000.00 GBP* 1.4% + £0.20 GBP
(For reference “$100.00 in 1914 had the same buying power as $2,191.79 in 2011.â€).
That’s the least of the damage the lack of competition in the financial world cause. From a discussion on bitcointalk.org:
If you don’t understand the usefulness of Bitcoins, then I can see why your interest is so fickle. Send me $0.10 without Bitcoin and let’s see what happens. Send me $100,000 in another country and see what happens. Try opening a store and accepting credit card orders from Cote d’Ivoire and tell me what happens. Try sending a paycheck to a home bank in another country every week and tell me what happens. Try playing online poker from the US and tell me what happens. Try sending money between two of your own bank accounts 50 times and tell me what happens. Try preventing the Government from seizing your bank accounts or inflating away the purchasing power of your money.
Complete this sequence:
- Slide rules are to calculators
- as CDs are to music downloads
- as broadcast television is to iPlayer
- as the postal service is to email
- as newspapers are to the world wide web
- as financial services are to …
The answer is Bitcoin. At first these companies were symbiotes: we needed them to smooth the movement of our money, and they needed us to generate the money. But after 100 years, 3.4% for sending a specially formatted message? No, no, no. They are symbiotes no more; they are parasites. It’s time for it to end.
Bitcoins have, since their June peak, gone from trading above $30 each, to now around $2. Many commentators are calling this evidence for the death of Bitcoin (handily ignoring the fact that they were trading at $0.60 in January). However, to look at the price is to miss the point; I accept that volatility of price is a problem, and that the previous run up to $30 was a bubble — that is irrelevant though. What is relevant is the fundamental value of Bitcoin is not as a vehicle for profit (those who cashed out at $30 were just lucky), it is as a vehicle for trade.
There are good indications that the price of Bitcoins has found a price floor. That’s a good thing. Given the inherent usefulness of the Bitcoin network as demonstrated above, I still anticipate (long term) the price of Bitcoins will be enormous (it has to be, given the fixed supply; predicted, finite and anticipated inflation).
Bitcoin will trigger a bloodless revolution. We finally have a tool to take power away from the cleptocracy that has it at present. Go then, get some bitcoins, spend them on stuff you would have bought anyway; accept bitcoins in exchange for some work, or for settlement of a debt. I guarantee that if what you want is change, those simple acts will have more effect that any number of referenda or general elections.