Whenever Bitcoin is brought up two thoughts often leap into the same arena at the same time one that involves the strange enigma of economics and the other that speaks to the freedom-loving cryptogeek in every Internet activist. So when I stumbled across Kevin Carson’s essay on the impact of Bitcoin at C4SS, it piqued my interest.

In many ways, Bitcoin is one of the best known and best-remaining and most popular forms of alternative currency on the market. It may still suffer from being relatively unknown in circles outside of particular modes of thought, but it’s constantly resurfaces in the popular media, it’s appeared in some forms on TV shows, and even appears in the news. It has all the hallmarks of a project that may just reach the goal of becoming a widespread technology.

A point the essay makes that I think is one of the current stumbling block for widespread acceptance of Bitcoin (aside from my caveats about its current stability) happens to be its user friendliness:

As Falkvinge argued, it’s usually not the most feature-rich version of a new technology that achieves the critical mass needed for popular acceptance. Rather, it’s the most user-friendly. “…It takes about ten years from conception of a technology, or an application of technology, until somebody hits the magic recipe in how to make that technology easy enough to use that it catches on. And when it does, boy, does it catch on.”

As entrepreneurs and investors (and yes, even speculators) continue to increase the popularity and therefore value of bitcoins, it will continue to attract developers and innovators to increase its user friendliness. At its core, the concept of a peer-to-peer virtual currency that quickly and seamlessly permits transfers over the aether of the Internet provides something that few of us already know: a secure way to transfer value between people without breaking anonymity or stride.

As still nascent in culture, bitcoins aren’t that user friendly; but the community is working hard to change that.

First, there’s the still-developing prototype “Bitcoin card” powered by Mycelium hardware, which just might just bring bitcoin transfers to people’s wallets with a wafer-thin credit-card like smart device. There’s also a number of apps that have appeared in various smartphone and mobile device markets such as a fully functional Bitcoin app for Android and a Bitcoin App for the iPhone. There’s even APIs being developed for Android to permit secure transfers via wireless between devices with BitTrust.

The Universal Currency Given Virtual Life

These applications will probably not hit mainstream first, but where they will arrive might be in smaller communities—most likely on the Internet—who use bitcoins to transfer value between different local currencies or just between themselves. As a peer-to-peer currency without a centralized control it makes it very easy for it to move anywhere there’s an Internet connection. In many ways it’s the perfect currency for multinational gatherings or even niche communities who have members who can’t easily exchange their assets for local money.

Carson’s article brings up Neil Stephenson’s cyberpunk novel Diamond Age as an example of a post-cryptocurrency world. In this book, much of the world’s nation states have crumbled or have been crushed under runaway inflation and a lot of the value of currency exists instead in easily tradable alternative currencies that can be exchanged for local currencies but are largely used within small non-local communities.

One such niche community might even be the cloud cyberlocker consumers, as we’ve seen Paypal and others may be withdrawing from them due to the cultural controversy surrounding the Megaupload debacle and pressure from copyright cartels. Peer-to-peer currency for a cloud and peer-to-peer culture, it would seem like a perfect fit for a virtual currency to provide value to services that virtualize media and culture.

Bitcoin’s rise to prominence will probably come from first being adopted into similar communities and used as an exchange or value currency to enable them to trade services. As long as this leads to developers and innovators looking at these communities to offering them applications and devices that enable user-friendly Bitcoin transactions it would in fact provide a stepping stone from the niche into the mainstream.