Depending on whom you ask and when, Gavin Andresen is either bitcoin’s greatest champion or out to destroy the virtual currency.
Andresen serves as the chief scientist of the Bitcoin Foundation, a group modeled after the Linux foundation that aims to provide some organization to bitcoin’s expansion, from establishing new ways to process transactions, to maintaining the Bitcoin.org site.
A kind of cash for the Internet, bitcoin marks the world’s first online, decentralized currency supported by peer-to-peer transactions, rather than government backing. Since mid March, the value of a single bitcoin skyrocketed from $47 to a record high of $250, then fell back down to its current price of around $72.
Andresen acts as arbiter and architect for the bitcoin community and helps coordinate improvements to the core bitcoin software used by the worldwide community. His toughest job, he notes, is trying to reach a consensus among the open source currency's distributed supporters, who correspond via inter-relay chat channels, on forums and on mailing lists.
HuffPostTech spoke with Andresen about being paid in bitcoin, why the virtual currency could one day be like email and who’s eyeing bitcoin now.
Bitcoin prides itself on being a decentralized currency supported by a decentralized group. So how did you come to have the position as chief scientist?
For my first bitcoin project in 2010, I created a site that then became pretty famous called the Bitcoin Faucet. I was giving away five bitcoins to anyone who went there. I started to submit code to Satoshi [Nakamoto, bitcoin's mysterious and anonymous creator] to improve the core system. Over time he trusted my judgment on the code I wrote. And eventually, he pulled a fast one on me because he asked me if it’d be OK if he put my email address on the bitcoin homepage, and I said yes, not realizing that when he put my email address there, he’d take his away. I was the person everyone would email when they wanted to know about bitcoin. Satoshi started stepping back as leader of project and pushing me forward as the leader of the project.
Do you have a political motivation for getting involved in bitcoin?
As I’ve gotten older, I’ve become mostly libertarian. I’m generally of the opinion that less government tends to be better just because I’m very suspicious of concentrated power. I realized that a lot of the evils in the world come from people who take or are given too much power, and often the way that they get there is through government.
You’re paid in bitcoin. How does that work? Have you been able sever ties with fiat currency?
My contract is written in terms of dollars and the exchange rate into bitcoins is calculated. It was being calculated every three months, but because of the current price volatility, it was decided my salary would be re-pegged every month. My salary is converted to bitcoin and taxes are taken out. You have to do all the tax computations in dollars because the IRS does not deal in bitcoins.
My first preference is to buy things that are sold for bitcoins using my salary although I will admit I’ve been diversifying out of bitcoins because it just doesn’t make sense to have all your eggs in one basket. I put a good chunk of my long-term savings in traditional investments, like index mutual funds.
So what can you buy with your bitcoins?
I convinced my barber to take bitcoins for haircuts. Just yesterday I purchased a new wallet using bitcoin which I’m excited about. The Bitcoin Store has a bunch of electronics available for bitcoin now. The online store actually changes their prices constantly -- every few minutes -- depending on what the exchange rate it.
I think more and more merchants will sign on to accept bitcoin as other form of payment. Just a few days ago, I saw a company that lets you buy hotel rooms and airline tickets for bitcoin.
How would you characterize bitcoin’s mission?
The mission is really to create a stable worldwide currency for the internet. And to let people all over the world to transact with each other as easily as people all over the world send email to each other.
I think bitcoin will have a similar adoption as email, which started out with the very technologically literate and spread to be more and more ubiquitous as it became easier to use. And just as it got easier to use email, it will be easier to use Bitcoin as people invest in it and become more familiar with it.
What is the greatest challenge bitcoin faces in realizing that mission?
The first is, is it fair? A lot of people feel like bitcoin is not fair because if you hold some bitcoins from when a pizza cost 10,000 bitcoins, as bitcoin has gained adoption, those bitcoins have become more valuable. bitcoin is in some ways it's like a high-tech Internet start-up where the people who start the successful start-up become wealthy because they created something that the whole world wants to use. I think a lot of people won’t want to use [bitcoin] because they feel like, “Oh, we’re helping those early-adopter geeks get rich.” I don’t know how you fix that. Bitcoin couldn’t be created full fledged.
The other big challenge is that no one knows the answer to, how will governments react? There’s a lot of thought that bitcoin will be a huge threat to existing tax systems or existing ways governments have of controlling currency flows across their border. I personally think governments will do what governments have always done: they will adapt.
Is bitcoin a currency or commodity?
I don’t think we know yet. It fulfills both purposes and looks a little bit like both. I don’t know if it will be used like gold -- where people store it and use it as token of wealth -- or if people use them like dollars, where you do use them as means of exchange.
How has the makeup of the bitcoin community changed in the last four years?
It started out among really technical people who were interested in cryptography and technology. Then the first early, non-geek people tended to be very libertarian and very distrustful of the Federal Reserve and government money. We’ve started to see some interest from people who love gold, and who see bitcoin as an electronic version of gold. Fairly recently, over the last six to eight months, we’ve seen a lot of interest from Silicon Valley venture capitalist folks who see it less as internet currency that might replace fiat currency someday, and more as a low cost payment network.
Are there countries you see embracing bitcoin sooner than others?
I could imagine bitcoin taking off some place other than the U.S. first. I carry about a Zimbabwe $1 trillionTK note in my wallet as a visual aid. Here in the U.S., we’re lucky because our currency is the world’s reserve currency and it’s stable. I could imagine bitcoin taking off in a country like Zimbabwe because people remember that they can’t trust their government currency.
New bitcoins are generated, or "mined," when computers succeed at solving increasingly complex equations. Bloomberg recently described this mining process as an "environmental disaster" because of the energy required to power the machines working on the problems.
The bitcoin mining process incentivizes people to be as efficient as possible and use as little power as possible to create bitcoins and to validate the transactions. The more efficient you are, less you spend on electricity and the more profitable you’ll be. In the future, I expect to see bitcoin mining in places where electricity is free or cheap. You could put solar array in the Arizona desert attached to bitcoin miners and instead of trying to ship that electricity all over world, you could ship Bitcoin all over the world. The output of bitcoin mining is heat. You’ll see bitcoin mining happening in places where people need heat anyway. I could imagine bitcoin heaters that, in addition to generating heat, generate bitcoin.]
You mentioned your wife was wary of bitcoin at first. Has she come around in light of its recent prominence and price hike?
Yes. She no longer calls it my "make-believe money project."