The Rise and Rise of Bitcoin, a new documentary chronicling the early days of the controversial cryptocurrency, premieres in Cleveland at the Cedar Lee on Friday. Cleveland was selected as one of three premiere cities because of Lee Road, the nation's first "Bitcoin Boulevard." Twelve businesses there accept bitcoin as payment. Bitcoin enthusiast Daniel Mross (the film's narrator and guiding spirit) spoke with Scene from his home in Pittsburgh about what exactly the currency is, what it means for traditional money systems, and why Northeast Ohio's Bitcoin Boulevard is so awesome.
Sam Allard: First off, have you been to the Bitcoin Boulevard in Cleveland?
Daniel Mross: I have not, and I'm really excited to. I had the website up today with my wife and we're actually going to see if we can get a sitter for the kids so she can come as well. In Pittsburgh, we have a bitcoin meetup group, but nothing like a Bitcoin Boulevard. From everything I hear, Cleveland's bitcoin scene is booming.
SA: What do you do at bitcoin meetups?
DM: I started the bitcoin meetup group on meetup.com two years ago, and initially it was just a way to find other people who were into bitcoin. Not everybody reads all the sub-forums, you know? At first it was just five or six people. It was always kind of informal and at a bar. Now we've got a couple hundred people, with additional events catering more toward education, but there's still the informal meetups with a bunch of bitcoiners talking about the scene.
SA: So it's a digital currency, but one of the knocks (I've read) is that it doesn't have a lot of practical application. What's your take?
DM: Bitcoin is first and foremost a protocol, but there's so many different ways that you can use it. It was adopted by libertarians and computer geeks early on as an actual currency, but as it goes toward the mainstream, where most people are comfortable with the current system and payment methods that they have, it's representing not just a stand-alone currency for people to 'opt out' of the system, but the tokenization of currency, maybe something that's better than credit cards.
SA: Beg your pardon? Better than credit cards?
DM: If you think about it, there hasn't been that much innovation overall in online payments in general. When you pay online, everybody still uses credit cards. You still punch in these numbers from a card that you have in your wallet. Everything else we do online is instantaneous and global and no strings attached, right? You can communicate online very easily. You can send an email to anybody, but if you want to move any amount of money you have to go through these integrated systems.
SA: And how would that change with bitcoin?
DM: Because it doesn't have any central authority that's in charge of it, it can be used globally no matter what platform or country you're in. For merchants, it's all about reducing the cost. It feels like every week, you hear about another breach, and 5 million credit cards get stolen from Home Depot or Target or whatever. And whenever that happens, the banks pay for it. But they don't pay for it out of their pockets. They pass on costs to consumers, which is why you have all these bank fees. With bitcoin, those types of frauds can't happen. That said, there are other concerns, namely, consumer protections that are much easier with credit cards. Those are the things that the industry is really trying to figure out now, and it's fun to watch.
SA: Plus bitcoin's still super volatile, right?
DM: Yeah, but for the merchants and people who want to accept bitcoin, like on Bitcoin Boulevard, it's actually very easy. The issue with the volatility is more for people who are using it. Why would you buy some bitcoins in order to pay for something later if they may be worth half as much in three weeks? The flip side, of course, is: What if it's worth twice as much? Bitcoins are fixed in number. There are only a certain amount that will ever be created, so in a way, it's like gold, and there's a scarcity aspect. Knowing bitcoin can never be inflated, the value is going to more directly track with the amount of people who want to use it.
SA: How do you use it?
DM: I've always tried to involve myself in a variety of different ways. I started tinkering with it and was fascinated with it as a technology. Also, politically, I consider myself somewhat of a libertarian, so I like the idea that it gives people another choice, another way to pay freely and take complete control of their own finances. At the same time, I mined bitcoins and I also used it, traded with people. It's worked for me as a speculative toy, as a hobby and as currency. I try to walk the walk with it as much as I can.
SA: What is "mining," a process you talk about in the film?
DM: When the system launched, the question was: How are we going to initially distribute this? How do we get them into circulation without just giving them to a handful of people? With the bitcoin network, since it's decentralized, data centers like the ones credit card companies have don't exist. Instead, that computing power is provided by bitcoin miners, people who are volunteering their computing power to the network. It's kind of crowdsourcing the transaction processing.
SA: What's the current value of a bitcoin in USD?
DM: Today, it's been around $375, but it's been dropping for the past couple of weeks. Last week, though, PayPal was announcing partnerships with Bitpay. The price doesn't necessarily seem to correlate with adoption. The number of wallets is increasing dramatically.
SA: So long-term, how do you see bitcoin?
SM: I see it as having opened the door to this new technology. I think in a few years, we're going to have a lot of different digital currencies, and they are going to derive a lot of the value from what they trade against bitcoin. I think bitcoin will kind of become the gold standard for digital currencies.