With VC money being poured into Bitcoin startups, more billion dollar businesses accepting it, and greater mainstream acknowledgment that Bitcoin is here to stay, speculation on where the future “hot bed” of cryptocurrencies will develop is receiving a lot of attention. The assumptions behind a “Bitcoin Valley” understandably come from an existing expectation of how new technology develops. We seem to be irrevocably attached to the idea that any one area can and should lead the way in Bitcoin adoption and innovation, and this idea has good precedence. Progress and innovation have traditionally been centered in geographic locations, but Bitcoin is a bit different. Thinking in terms of where a “Bitcoin Valley” might form might not necessarily be inaccurate in the short term, but it dramatically understates what Bitcoin is capable of attaining, and the scope of the impact it will have in the long term.
Bitcoin is the first time that something with the qualities of a scarce physical object exists only on the Internet digitally. This scarcity allows it to retain an arbitrary amount of value that makes it useful for trade, compounded by the fact that it is able to travel around the world as fast as any piece of information that can travel over the Internet. That it exists only in cyberspace means that the Bitcoin protocol is not operationally tied down to any physical location. It can be used and mined from anywhere on the planet with an Internet connection, but that much is obvious.
However, how about Bitcoin based businesses? Currently, while the United States indeed possesses the largest number of Bitcoin startups, they are still spread globally—everywhere from Hong Kong to San Francisco, Atlanta to London, and beyond. A seemingly logical characteristic an area needs to have to become the “Bitcoin Valley” is favourable regulatory policies. However this only really applies to businesses dealing with the intersection of fiat money and cryptocurrencies. This is obviously a massive niche as new adopters need to get their hands on bitcoins somehow, and all bitcoins are likely to pass through the Coinbases, Circles, and exchanges of the world many times over. Yet as large a financial opportunity as conversion is, it won’t be the main driver of future Bitcoin growth.
One of the fundamental features of Bitcoin is that it allows you to act as your own bank, completely sidestepping complicated and expensive payment gateways and fiat accounts. The most massive strives in Bitcoin will come from businesses that leverage it as a payment and banking tool, increasing daily bitcoin transactions and helping to stabilize its fluctuating value. Companies like Dell and Expedia accepting it are the first step, but as the ecosystem continues to mature the biggest contributors will be startups that only accept bitcoin in lieu of dealing with expensive and low quality payment gateways.
Payment processors such as Authorize.net charge a host of difficult to calculate fees that can vary widely from merchant to merchant, and is especially hard for small sites and overseas entrepenuers to setup. At the end of the day this is all just to acquire a less than ideal means of payment for both the business and its customers. For this reason as Bitcoin adoption increases it will be incredibly advantageous for merchants, both online and off, to completely cut out traditional payment processors. Bitcoin even allows them to operate a business without touching a bank account or going near legacy financial systems. This is already demonstrated by Blockchain.info, which takes all revenue in bitcoins and whose CEO, Nicolas Cary, is also paid entirely in bitcoins. This model will provide a huge opportunity to those in the world without access to traditional financial services, and entrepreneurs who no longer have to deal with expensive and clumsy payment processors or even banks.
After a new adopter acquires some bitcoins for the first time, and assuming it enters a fairly robust “Bitcoin economy”, it is no longer subject to any effective regulatory oversight. Especially in regards to the web, with no need to deal with any traditional financial institutions, the physical location of a startup dealing in bitcoins in regards to regulation becomes insignificant. Indeed anyone using Bitcoin is tapping into an ultra fast payment system that can be used by anyone around the world, regardless of where the customers or business is located. When you level the playing field this dramatically, the only logical reason to relocate oneself anywhere is to access talent and/or funding. Yet in the 21st century even those two important factors aren’t as magnetic as they originally were. With continuing growth and innovation in crowdfunding, much of which is naturally occurring in cryptocurrencies (Swarm being the prime example), new models for achieving funding and courting investors are quickly becoming valid options. Again this works regardless of location, and coupled with online social tools that link investors to potential promising startups, the old methods of seeking capital are no longer the only ones.
When all of these factors are in play it allows startups from any part of the world to compete evenly on the same playing field, why shouldn’t talent follow a similar model too? With paying employees via bitcoin so easy, and the growing popularity of sites like Coinality.com, remote work and collaboration only becomes more and more attractive, even if it’s just an initial first step. This allows you to pool talent from around the world regardless of location, rather than just being limited to those in the area or those who are willing to move. While there will always be an undeniable allure and advantage in working close together physically with a team, the alternatives nonetheless pulls the focus away from established centers of talent and helps to ensure the deck isn’t so stacked against the little guys.
In developed countries such as the United States, financial services are indispensable.They are a fundamental part of the economy, and its ability to function at the extremely high and complex level that it currently does. Bitcoin adoption will not only improve upon that financial system, but make it available to countless more for the first time. As such, both the largest opportunity for businesses and the greatest source of innovation will be these newly empowered regions, and anyone else who decides to “plug in” to the Bitcoin ecosystem. Because of its purely digital nature, and complementary technological factors in crowdfunding and remote working, Bitcoin’s benefits are available to everyone. Whether you’re in a Harvard dorm or in an apartment in India, the disparity of opportunity between the two is smaller today than it ever has been.
Bitcoin’s largest potential as a disruptor is not in elevating a few supermassive companies in one geographic area. It’s in leveling the playing field the world over, and opening the floodgates to a truly “flat” world where location has little influence on anyone’s ability to compete in the global marketplace. It’s in granting more opportunities and control for the vastly unbanked third world, struggling entrepreneurs, and every other individual on the planet. While a geographic center may indeed emerge with many Bitcoin based companies, it will pale in impact to the greater global innovation that will be simultaneously made possible under those circumstances.
While it’s easy to count the number of new billion-dollar businesses accepting bitcoin, and all the VC capital being poured into it, the aggregate work of countless nameless individuals is what keeps driving Bitcoin forward. One should remember Bitcoins humble beginnings over five years ago when it was being mined on a single PC. Its growth from then to now, already an astronomical achievement, is thanks entirely to the efforts of a dedicated, risk taking, and entrepreneuring grassroots community. And it is that decentralized and grassroots community, not increased regulatory clarity or flashy headlines, that will continue to drive Bitcoin adoption ever forward.