It’s 2021. Everyone has heard of Bitcoin. Yet, there are still very few people who actually use bitcoin. Adoption varies by country, with Nigeria at 32%, and the USA at 13%. Those numbers look pretty big, but when you start thinking about how many people in the entire world use bitcoin as a savings vehicle, global adoption looks more like 2%. For daily transactions? Probably even less.
Compare that with mobile phone adoption at 61%, and smartphone ownership at 48% [source]. The first iPhone came out in 2007. Bitcoin was invented just two years later in 2009. So why the huge difference?
Firstly, two years can make a huge difference in the world of technology, so who knows what’s going to happen to Bitcoin by mid-2023? Technology adoption usually follows an s-curve, and seems to be accelerating in the information age.
However, more importantly, and the point of this article, is that I think Bitcoin hasn’t had its “killer app” moment. It hasn’t found that thing where people ignore some of the downsides for that gotta have it feeling.
With the iPhone, I believe its killer app was the touch screen. Mobile music was nice, but MP3 players were already a thing. Mobile internet access is cool now, but in 2007 websites weren’t mobile-friendly at all. The mobile game craze came much later, and the first iPhone games were simple puzzles and classic games like Battleship or Poker. What really drove adoption was being able to one-hand your phone on the go. It was a smooth, intuitive experience, and hasn’t changed in more than a decade.
So although everyone knows what Bitcoin is, what will take it to the smartphone adoption level?
On second thought, games might have been the killer app for iPhone. I remember really wanting an iPhone so I could play the Doodle Jump mobile game.
The Answer: Streaming Bitcoin Micropayments
Personally, I think Bitcoin will enter its parabolic adoption phase in this decade due to one feature: being able to stream micro bitcoin payments over the lightning network. The lightning network is a “second layer” built on top of the Bitcoin protocol which allows you to exchange bitcoin payments much faster and much cheaper than using on-chain bitcoin.
One of the main criticisms of bitcoin is that it cannot be used for day-to-day transactions like buying coffee. Buying a $2 coffee at the wrong time of day could cost you $5 in fees and take 10 minutes to settle! That’s too slow. What they fail to mention is that Bitcoin is what’s called a final settlement payment network, meaning when you transact on the Bitcoin network, the exchange of money is FINAL.
The reason credit card transactions and PayPal transactions are fast is because they are 1) maintained by a private company with an internal ledger and 2) not final. They are IOUs. When you buy something with your credit card, Amex or Visa, they are basically saying that they know/trust you, and you’re good for the money. They front you the money, then collect later when you pay off your credit card.
In this way, credit cards are like a fast layer on top of your slow bank. Imagine how slow transactions would be if you had to wait for ACH transfers to go through. Imagine how long you’d have to wait for checks to clear! Transactions move fast with credit cards because they are not actual, real money being exchanged. Settlement happens behind the scenes, and most people don’t even think about it.
Lightning is one example of a second layer for Bitcoin (there are a few others, and maybe more in the future). It allows us to settle smaller amounts of money much cheaper and much faster. What makes lightning better than credit cards is that it’s not a privately owned company that can control your transactions, and it is real bitcoin being sent over the network – settled instantly – kind of like sending bits of gold dust through the internet.
Income Safety For Creators & Sellers Is Improved With Open Source Software
Streaming micropayments will be a powerful improvement to the online creator ecosystem, whether you’re talking about video, audio, images, text, or selling physical goods. What a lot of creators don’t know is that when they build a business on a platform someone else controls, they can lose their life work in an instant.
Over the years, there have been many incidents with popular social media platforms like Twitter, Facebook, YouTube, Patreon, and Instagram. Creators with millions of followers and $10,000’s in monthly revenue have woken up to their business, and income, wiped off the internet. Even online stores like Etsy, eBay, and Shopify can ban sellers without warning.
Sometimes, there’s an explicit reason. Sometimes not. The result is the same. It takes an insane amount of work to build a successful business online, and to see it taken out in an instant, without recourse, is crushing.
The go-to response here is that they are a private business, and they can do what they want. “Free Speech” protects you from government curtailing speech, not from private companies. You can’t go into any local office and start talking about how jet fuel can’t melt steel beams, and YouTube isn’t legally required to let you post videos in the name of free speech.
Personally, I think it kind of sucks, and I’d rather see all diverse voices compete in the marketplace of ideas. Can’t help it though. It’s their platform.
One recent example of this was in 2021 when out of the blue, OnlyFans said it would ban explicit content. Nobody saw it coming. Explicit content was the whole idea of the site, or at least it’s what everyone used it for.
Bitcoin fixes this.
When you build your business on an open platform, you can always take your business to another platform if need be.
For example, I build my websites with WordPress. WordPress is free and open source software, so there’s no way for WordPress itself to ban me from their platform. I do have to host my website at a centralized web host, but because WordPress is FOSS and so widely available, if my host bans me, I can just move it to another host. If things get really bad, I could use a host in Russia or some Caribbean island.
There’s a good reason as well, as to why WordPress is the choice of CMS for more than 30% of websites globally. When software is open source, you have more mindshare working on it. You don’t need anyone’s permission to create a WordPress plugin, and you don’t need anyone’s permission to create a lightning app.
Imagine if YouTube was open source, and if they banned your channel, you could just move your data to another video host.
That’s also why Wix and Weebly suck as CMS for websites. They are closed source.
For the independent creator, building your business on an open source platform is a better strategy than using centralized platforms. Even more so, as more developers start to build apps on top of lightning, there will be a greater variety of tools available to serve the creator community, and people will start to move to open source alternatives.
Value-For-Value Model Is Better For Creators, Entrepreneurs, & Consumers
Another downside to using centralized platforms is that they extract a lot of wealth from creators during the process. Fair enough – the business has to make money and uses it for the advancement of the platform, but many times this money ends up going to CEO bonuses and fat paychecks to people who don’t have skin in the game. The direct value-for-value model cuts out the cost of the middle man, meaning patrons pay less, and creators make more.
An example of the value-for-value model which is currently working is podcasting 2.0.
Another example, which does not exist yet, but I see a potential market for, could be streaming payments to ghostwriters. I run a few websites and outsource content using a centralized platform to find writers. For new writers, the platform takes a whopping 20% cut of the cost of the project from the writer’s fees, and they charge me a monthly fee on top of that. I use the platform to track hours, deposit escrow, and make payments.
If there was a bitcoin-based alternative which was peer-to-peer, I’d save money on the monthly fee, and the writer wouldn’t give up 20% of their wages. I could pay the writer directly AND communicate with them securely over lightning.
What about a decentralized marketplace for handmade goods, similar to Etsy? Anyone in the world could make local handmade goods and exchange them for bitcoin directly. Someone in Nigeria, with no bank account or computer, could use their mobile phone to accept bitcoin payments and ship something to you. Plus, with no middle man, you’d save a ton on fees.
Now I’m thinking about decentralized Uber. Or decentralized Doordash. They just passed a law in California saying that rideshare drivers must be qualified as employees, meaning fees are going up since Uber will have to pay out more benefits. That’s less flexibility for the driver and the costs are passed onto the customer. If there were no central entity controlling the app, and payments were done peer-to-peer with bitcoin, there’d be no way to stop it! It’s not illegal for me to pay someone to drive me home after a night at the bar, right?
Right now, some of this technology doesn’t exist, but it’s possible, and we’ll probably see it develop in the next decade. Given the choice of having more flexibility and getting paid more, versus the alternative, we may see a deluge of folks switching to the peer-to-peer versions of technologies.
More Money Exchanged Fast Means More Global Wealth
Bitcoin makes exchanging money faster and easier. It removes barriers to participation in the economy by allowing people without bank accounts to engage in the global economy. They can buy and sell online goods, or shop for IRL goods using their mobile device. Final transaction settlement is also faster. A bitcoin transaction can be settled in less than an hour, while a typical global banking transaction could take weeks to settle.
By enabling more participants in the economy, with a larger quantity of value to be traded, and everything moving at a faster pace, economic activity in the future will explode on a bitcoin standard. Plus, let’s not forget that there will be the added benefit of more security trust in the finality of each transaction due to the lack of 3rd parties within a bitcoin transaction.
You can get paid more often too. You can stream payments per second or per minute, almost for free. Why do you think you only get paid every two weeks or once a month right now? It’s because it costs time and money to process payments. Tracking hours, writing checks, making deposits, and waiting days for everything to clear. With bitcoin, this can be automated away, reducing payroll overhead for companies as well.
When you have faster access to your money, your income becomes more liquid, and you have more freedom. Given the choice, would you rather be paid daily, or monthly?
Though lots of people are unfamiliar with bitcoin as a savings or payment technology right now, when these features of speed, security, and freedom become more obvious (and easier to use), making the switch to bitcoin will be a no brainer. For some, bitcoin may be their only choice!
Emerging Opportunities For New Business Models
It may seem strange to get excited about something you can’t even describe yet, but before the internet, could you have imagined how important electronic mail would be? Before mobile phones, would you have guessed how fun it would be to send memes to your friends throughout the day? Before YouTube would you have thought that someone could make money recording videos of themselves playing video games, while other people watch? Before Uber, would you have hopped into a car with a stranger after a night out drinking?
The internet changed things forever. Then smartphones changed things again. Now Bitcoin changed how money works, and it’s the next leap forward.
The foundation is already built, and it’s allowing entrepreneurs to build amazing products and services that most of us can’t even imagine right now.
One super cool idea that seems realistic is the idea of pay-per-minute technical support. For example, for computer support, rather than paying a monthly subscription to The Geek Squad, you could hire an expert to guide you through the process through chat, video, or phone, and pay an individual by the minute.
This could even work for physical tasks like plumbing. If your drain is clogged, instead of paying a plumber $80/hour to go to your house clean hair out of your drain, you can give them a call and pay them for each minute of advice. They could guide you through which tools to buy, how to take things apart, and how to put them back together.
You’ve seen how fast technology can develop over the past decade or three. I was using dial-up in the ’90s so I could connect to Napster for 30 hours to download MP3s. Now I can stream music with 24/7 instant internet access. It’s pretty exciting to think about what we could be doing with Bitcoin in 30 years.
What’s Needed For Parabolic Growth?
Lightning is still a little difficult to use. To use it properly (non custodial), you must set up your own bitcoin node and open channels with peers. Managing channel liquidity is not intuitive and requires a deep interest in learning how to do it successfully. There are custodial lightning wallets, but the future survivability of these wallets due to money transmitter laws is unknown. In some cases, you can have a company host a node for you, but the implications of that are unclear as well.
To use lightning apps like games or podcasts, you’re going to need to know a little bit about how bitcoin works.
The fact is, most of the people who use these apps right now are bitcoin people who are either curious about the tech or enthusiastic about helping to increase bitcoin adoption. For example, you can listen to a podcast for free on Apple Podcasts, so why would you pay for it using Breez or Sphinx?
It’s getting better though, and what I think is most interesting is the emergence of lightning-forward companies. For example, Paul Ioti is allowing remote works in developing nations to do microtasks to earn bitcoin via Stakwork. The Fold debit card is paying out bitcoin rewards and moving to lightning for payouts. Zebedee is working on integrating lighting into existing online games like CSGO with Infuse.
Parabolic lightning and bitcoin adoption is going to happen when either 1) there’s no other choice, or 2) bitcoin and lighting become better than the legacy system.
An example of when there’s no other choice could be that an extremely popular podcast comes out on a lightning-only app, like when Joe Rogan moved his podcast to be Spotify Exclusive. Another example could be people in developing countries who don’t have bank accounts, and have no choice but to accept bitcoin payments if they want to work online.
One last possible scenario here could be that enough people get banned by centralized platforms that there becomes a serious cohort interested in creating content on bitcoin-only platforms.
If not, then we may have to wait for bitcoin and lightning apps to become better than the alternatives. WordPress is an example of this. There’s no way I’d build my blog on platforms like Wix, Squarespace, or Weebly. You’re reliant on centralized support. You’re limited to a single host. Tutorials are almost non-existent. They just suck compared to WordPress – and WordPress is free!
We might see something like this, where the incentive to switch to bitcoin platforms becomes so strong that people voluntarily move over.
We aren’t there yet, but it’s coming. I can’t wait to look back at this article in 10 years and see what’s happened in the meantime.
Nobody knew they needed a smartphone in 2007. 15 years later, 50% of the people in the world own them, and many, including myself, rely on them for work. Just a decade and a half to go from not existing to essential. Things change fast, so don’t look at where Bitcoin is right now, look at where it’s going in the future.