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Erik Voorhees

Erik Voorhees: “Bitcoin is the new Frontier”

Erik Voorhees is one of the foremost Bitcoin entrepreneurs and has helped build some critical parts of the Bitcoin business ecosystem, as well as being a loud advocate for a free, decentralised and voluntary currency. When the history of Bitcoin is written, he will be remembered as one of the brave few explorers ready to set out into the unknown and risk life and fortune to create a new world.

Bitcoin Magazine: You discovered Bitcoin in May 2011… how? where?

Erik Voorhees: It was fairly innocuous, but had profound consequences! I was cruising Facebook and saw a friend’s post that mentioned some weird currency that had appreciated by a gazillion percent since the prior October. I clicked the link, read about this thing called Bitcoin, and dismissed it outright as preposterous. Fake internet money didn’t appeal to me. Then I read more, and more, and I found an elegant answer to each skeptical question that popped into my mind. After a couple hours, I was utterly hooked, and realized it would change the world and I better figure out what the hell it’s all about.

That day was one of the most important days of my life. It was like discovering some great truth, like seeing the future. I quit everything I was doing and jumped down the rabbit hole.

BM: What is the most important feature of Bitcoin in your opinion?

EV: This is a very good question. The most important feature is the fact that Bitcoin is decentralized, that it does not have any person or group of people who control it. It is from this feature that all the societal ramifications can occur, because a monetary system without a company or group of people behind it cannot be shut off. There is no office to raid, no server farm to close. Bitcoin is thus politically neutral. It excludes nobody, it has no geographical restrictions, it doesn’t make judgments on its usage. It has no terms of service. Bitcoin is a pure technological tool which will necessarily revolutionize society and finally separate money and state. The decentralized nature is what enables all this magic.

BM: Many people have problems trusting a decentralised system founded by an anonymous programmer… can you explain the significance of Bitcoin being an open source project?

EV:  Yeah that’s easy… open source means you don’t need to trust anyone. Just go read the code. Thus the creator of Bitcoin is irrelevant, there is no need to care what his intentions were or what kind of person he was. There is no need to fear some secret scam is occurring.

You mention that some people have problems trusting a decentralized system, but why? Because there is nobody in charge? Because there is no person who dictates the rules? This is precisely why you CAN trust it. It’s often quoted that a nation should be based on laws and not on men, because men can be corrupted, are fallible, and are often unpredictable. Bitcoin is this principle applied to money: it is a money of laws – mathematical laws – and not of men. This is why it has earned, rightly, the trust of some many enthusiasts.

BM: Miners, gamblers, hackers and smugglers… is Bitcoin the Wild West online? Will it become boring once it goes mainstream?

EV: Bitcoin is absolutely the Wild West of finance, and thank goodness. It represents a whole legion of adventurers and entrepreneurs, of risk takers, inventors, and problem solvers.  It is the frontier. Huge amounts of wealth will be created and destroyed as this new landscape is mapped out. I believe the effects of this adventure will be profound, for while the “Wild West” was a uniquely American phenomenon, Bitcoin is a global one.

Will a mainstream Bitcoin be boring? Perhaps by definition it will be, just as electricity is boring to us today, while at the turn of the last century it was hugely exciting. And of course, just as electricity, which is now boring, enabled the creation of unlimited new, exciting projects (including Bitcoin!), so too will Bitcoin enable a world of new innovation for many years to come.

BM: What first gave you the idea to create SatoshiDice? How would you describe your experience running the site this past year?

EV:  I didn’t create SatoshiDice, but I am involved with it. To be honest, my experience has not been as pleasant as it should have been, for being an American citizen is a huge liability, and I worry constantly that the US Government will harm me in some way.

The past year has shown me that America is not the land of free markets and free people that it was advertised to be in Government schools when I was growing up. America’s government has grown into an abhorrent apparatus that steals, harms, and imprisons people who have harmed nobody. At best, it seizes half the wealth you earn or makes you dependent on the wealth it has seized from others, and at worst, it ruins or ends your life.

The amount I’ve spent on lawyers just trying to navigate the absurd legal system is enough to feed hundreds of families in a third world country on a continual basis.

In short, my experience as an entrepreneur in “the land of the free and home of the brave,” both regarding SatoshiDice and in my other projects, has taught me that America is a lie. It has become a pathetic fiefdom, and I wish Americans would wake the hell up and see what’s happening.

BM: Some people criticise SatoshiDice for “spamming” the network… what would you say to them? If Bitcoin is to scale, shouldn’t it be able to take this traffic and more?

EV: Yes there is a number of people who hate me and hate SatoshiDice because it has caused so many transactions on the network. They call it spam because they believe their transactions are more legitimate than mine, and thus mine are spam. Apparently it’s okay to send “some” Bitcoin transactions, but if you send “too many” then that’s a no-no. “Too many” has never been defined, of course.

Further, SatoshiDice pays the standard Bitcoin fee for every single transaction, and in this way has paid more to support the mining network than everyone else, combined. Critics retort that there are other externalities caused by SatoshiDice. Well that is true, and Bitcoin better fix that problem, and it will. I’ve offered non-trivial sums of money to people to work on and figure out good solutions, but this stuff takes time.

In the end, haters gonna hate.

BM: You hold Bitcoins, but also gold and silver. Is it fair to call Bitcoin a gold standard for the Internet?

EV: I do love gold and silver as money, because I know why they make excellent money (tl;dr it’s because of their specific properties). Bitcoin’s specific properties similarly make it an amazing money. And while Bitcoin is certainly new and hasn’t withstood the test of time (like gold), some of its properties are far superior to metals in terms of monetary usage. Primarily, one cannot send gold instantly anywhere, period. This makes it very poor for modern commerce. While it’s true that a digital gold-backed currency could exist, the fact is that introduces severe counter-party risk on the part of the backer. E-gold is the perfect example of this, because as soon as the government gets angry about how e-gold is used, it shuts it off and arrests the owners (land of the free).

So while precious metals make excellent money, they do have some problems. Bitcoin has problems also, of course. Neither are perfect, but in general gold and Bitcoin highly complement each others’ weaknesses. Anyone who believes in free and open markets and individual rights should have a very warm disposition toward both precious metals and Bitcoin.

BM: Can Bitcoin be divorced from its political implications? Can it be “just a payment system”?

EV: Interesting question. I think while the Bitcoin system, as a technology, is “apolitical,” its ramifications cannot be divorced from politics or society at large. And while a socialist might rightly hail Bitcoin as an equalizing force (it is), the truth is that it equals out peoples’ rights, not the result of their behavior. In other words, Bitcoin is highly individualistic, and robs power away from collectives and puts it in the hand of each person who cares to hold it.

Beyond this, if Bitcoin succeeds it will inevitably cede power from governments, because much of a government’s power comes from its ability to print and control the currency that its subjects use. I think it would be hard to argue that Bitcoin would pull society away from individual liberty, and as such it is very much a libertarian technology. Socialists have every right to use it of course, but they may find that by doing so they enable everyone else to use their own money in the way that they personally see fit. This is the antithesis of collectivism, and will hugely undermine the coercive power of the State.

BM: When will we see the first major government attacks on Bitcoin? How much damage can they really do?

EV: I think governments see Bitcoin as a problem in terms of money laundering, drugs, tax evasion, etc. For this, they will try to regulate it more closely. They will not try to downright attack Bitcoin for these offenses. What they will attack it for is when they realize that those offenses are just a distraction… for the real power of Bitcoin is that it will increasingly compete with government fiat currency. Bitcoin will pull in more and more business and incrementally the actors using it will discover less and less need for dollars or euros or yen. This happens gradually. At some point, however, the government will realize that this made-up magic internet money is wresting power away from their anointed currencies and they will then come down hard. When will this happen? I have no idea, but I imagine it will be too late, because it probably already is.

It’s also important to remember that not all governments will act in tandem. It’s possible that one regime will assault Bitcoin while others will be agnostic and others may even encourage it. Those regimes that clamp down hardest will simply squeeze an increasing amount of commerce over to those regimes that are friendly. Profits seek the path of least resistance and digital, frictionless currency is that path. Governments which attempt to abort this process will hamstring their competitiveness, and I fully expect some of them to be this foolish.

BM: How many Bitcoin users are there right now in your estimation? When do you think that we will reach 10 million users, and what will it take to get us there?

EV: My guess here is pretty anectodal and unscientific, but I’d say there are a few million people who have used Bitcoin in some way. Then maybe 500k-1m who use it occasionally, and maybe a couple hundred thousand who use it frequently. Ten million “occasional” users will likely be reached within two years and that’s probably about one order of magnitude higher than today.

What will it take to get us there? More of the same. More businesses, easier tools, better security, and a sprinkling of time and luck.

BM: What is the most urgent infrastructure that the Bitcoin ecosystem needs right now?

EV: Bitcoin needs better ways to buy and sell Bitcoins quickly. In the US, BitInstant and CoinBase do a reasonable job, but it needs to be better and more specifically faster. And while the US is in the “reasonable” category, elsewhere in the world needs much better ways to buy and sell quickly. The ability to move in and out of Bitcoin in a frictionless manner is what allows the magic to happen – it’s what lends utility to the payment system aspect, and the payment system is what gives the currency its value.

By

Félix Moreno is a trader, entrepreneur and economist

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