Are Startups Better Off Hiding the Fact They’re Using Bitcoin?
One of the main issues that has held back the adoption of Bitcoin as a network for value transfer on the Internet is that it’s too difficult for the average person to figure out how to use it. With long strings of characters for Bitcoin addresses and volatility risk associated with holding the digital currency (among other issues), the lack of adoption among the general public should come as no surprise.
To combat the poor user experience associated with Bitcoin, entrepreneurs and venture capitalists now view Bitcoin as the plumbing that can power higher-level applications. In other words, startups are now hiding the fact that they’re using Bitcoin from their users (or rather just not mentioning the digital value transfer system at all.)
During the Bitcoin talk at SXSW Interactive 2016, Freemit CEO John Biggs discussed the idea of hiding Bitcoin from the consumer with the Winklevoss twins, who co-founded the Bitcoin exchange Gemini. Biggs made his view on this topic clear during the recent event when he stated, “Our mission is not to talk about Bitcoin at all.”
Hiding the Technicals of Bitcoin
“You shouldn’t see a Bitcoin address ‒ just like when you go to Google and you type in ‘google.com’, you don’t see the IP address. I think that Bitcoin needs to be under the hood, it’s not user-friendly enough in a command line type format.”
The Winklevoss twins have attempted to make Bitcoin as easy to use as possible on Gemini. Tyler noted, “If you sign up for Gemini, it’s just as easy as using any other website.”
Even for Bitcoin deposits and withdrawals on the Gemini platform, the Winklevoss twins have attempted to make the process as intuitive and simple as can be. Tyler talked about how their exchange uses QR codes to remove Bitcoin addresses from the equation whenever possible. He added, “It’s as simple as taking a picture with your iPhone.”
Using Bitcoin in 2016 is Similar to Using Internet in 1995
Tyler Winklevoss made analogies to the early days of the Internet when he talked about the difficulties associated with Bitcoin usage right now. For this new technology to gain mainstream users, the Winklevoss Twins believe the entrepreneurs and innovators in the space need to remove the technical complexities from the high-level applications. Tyler Winklevoss said, “It can’t feel like surfing the web in 1995.”
In terms of the problems with getting people to use Bitcoin right now, Tyler Winklevoss added, “Entrepreneurs like ourselves and [John Biggs] ‒ we’re going to change that, and we are changing that.”
Which Startups Should Be Hiding Bitcoin?
One of the possible reasons Bitcoin may not be completely user-friendly at this point is that most startups have been building the basic infrastructure required to make the system function. In reality, there’s no point in hiding Bitcoin from the end user when you’re building exchanges and wallets.
Now that the basic groundwork for the use of Bitcoin has been completed, startups can focus on less technically-inclined users. Cameron Winklevoss explained, “I think there’s going to be a lot of companies that are probably utilizing Bitcoin in their transactions, but the end user is going to be none the wiser for it.”
In the past, Blockchain Capital Managing Partner Brock Pierce has also discussed the idea of hiding Bitcoin from consumers. Abra is a Blockchain Capital portfolio company that won Launch Festival 2015 without mentioning Bitcoin during its presentation.
Cameron Winklevoss also touched on the notion of appcoins, which some believe could be used to decentralize other applications in a manner similar to the way Bitcoin has decentralized value transfer on the Internet. The Gemini co-founder stated:
“Cloud computing can be decentralized. Cloud storage can be decentralized. Money has been decentralized. Social networks can be decentralized. Any sort of cloud-based service on the Internet could have a token or an appcoin and be decentralized. I’m willing to bet more often than not that’s the future we’re looking at.”
Cameron Winklevoss’s comments appear to be a reference to various alternative tokens, such as Storjcoin x and Ether, which are intended to power the decentralized storage and computing applications of the future. Having said that, there are plenty of people in the Bitcoin community who aren’t convinced that the economics of appcoins make much sense at all.
The startups that use Bitcoin without ranting and raving about it should be watching closely over the next few years. In a world where many Facebook users don’t realize that they’re also using the Internet, this strategy could have a positive impact on bringing Bitcoin to the general public.
Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, NASDAQ, RT’s Keiser Report and many other media outlets. You can follow @kyletorpey on Twitter.