Obi Nwosu is the CEO and co-founder of Coinfloor, the UK's longest-running Bitcoin exchange. He has over 20 years’ experience building online marketplaces and bringing virtual currencies to tens of millions of people. Obi writes The Road to Bitcoin Hegemony, a weekly recap of some of the most impactful developments in Bitcoin.
No one enjoys paying sales tax, but it is at least one of the more transparent ways for the state to raise revenue, especially when compared to printing money.
But there’s a payment that’s arguably as pernicious as any government levy, and which most of us make without thinking about it. This is the daily “tax” on identity that every internet user pays each time we use a “free” service.
These days, the old adage of “if it’s free, you’re the product” is common currency: you’re as likely to hear it from your granny over tea and fruitcake as at a Silicon Valley conference. Everybody knows that freedom isn’t free, even if they have little idea of the scale of what’s being sold. So, what’s truly astonishing is not the mind-boggling value of our personal data (the digital marketing sector is set to reach over a trillion dollars by 2027, more than the GDP of the Netherlands). It’s the fact that so many of us happily accept this unprecedented intrusion into our most sensitive secrets as merely the “cost of doing Internet.”
The days of the identity tax are numbered, although, the herald of a better, fairer and more transparent Internet is not who you might expect. As CEO of Apple, a company that makes expensive, shiny lifestyle devices, Tim Cook is not bound by the code that governs data-based behemoths. This enables him to pick fights on privacy with the likes of Google or, as we saw last week, Facebook.
Obviously, a ding-dong between the heads of two tech titans makes for compelling copy, and some sections of the media had a field day, with Inc.com claiming “Tim Cook may have just ended Facebook.”
For once, the hyperbole wasn’t misplaced. Facebook’s days are surely numbered, even if it’s not Cook who’ll kill it. It’ll be us.
Because each day, more of us realize that collecting and selling our most sensitive data—including manipulating and profiting from our base emotions—comes at a price. This has been a lucrative business model in the short term, but at the cost of transparency and data self-sovereign identity. And increasingly, people realize that the feelings of inadequacy and FOMO they get from their friends’ carefully curated news feeds isn’t worth what they pay.
So, will Tim Cook’s criticism topple those empires that depend on gobbling up our personal data? Not on its own, no. To do that, we need to show that another future is not only possible, but preferable. And that’s what so many people get so badly wrong about Bitcoin. They see it merely as a competitor to fiat currency, and completely miss the point that it is the prototype for a de-identified and decentralized future. Bitcoin doesn’t identify and manipulate you because it can’t—not today, not ever.
There's another equally important guarantee that data harvesting apps are set up for a fall. De-identification leads to radically better user experiences—and great UX converts everyday users into loyal evangelists. Don't believe me? Ask Apple. It's why they became the world’s most valuable company.
Who doesn't want a world powered by sats, not ads, where we can say goodbye to registration forms, log-in screens, two-factor authentication, or "forgot my password" processes?
The hope and joy with which we greeted Facebook, Google, Amazon, and their ilk has turned sour. The fact that it’s impossible to be anonymous on Facebook, and that (for example) you can have your Facebook or Oculus subscription canceled if Cupertino finds out you used a pseudonym, only adds to our sense of powerlessness. Like death and taxes, Facebook’s identity levy seemed inescapable.
But that is the destiny of Bitcoin: as the vanguard of a movement for a new relationship between mankind and technology that is founded not on identity taxes and data abuse, but on pseudonymity, privacy, and, above all, respect.
“If you’ve got nothing to hide, you’ve got nothing to fear.” Such is the rallying cry of censors and advocates of enforced online identification the world over. Bitcoiners can rightly turn that statement on its head and ask central banks: “If your fiat’s so hot, why are you banning Bitcoin?”
On Sunday, Nigeria’s central bank ordered banks to close accounts dealing in cryptocurrencies, saying they threatened the country’s financial system. As both an Anglo-Nigerian and a bitcoiner, I can’t say I was massively surprised by the news. Here in the UK, Bitcoin is suffused with future promise as a hedge against coming inflation. In Nigeria, where high inflation is very much a day-to-day reality, Bitcoin is a necessity today, which explains why the country has seen adoption rates that put other nations to shame.
As with all attempts to force people to use fiat, I predict that Nigeria’s efforts will have about as much effect as outlawing the Law of Gravity. The only effect will be to draw further attention to Bitcoin’s raison d’etre, so well summed-up by a 2019 paper by the National Bureau of Economic Research which highlighted its ability to improve welfare in emerging markets.
Nigeria’s government should wake up and smell the palm wine. Resisting the orange pill is futile. Embrace it or not, Bitcoin will make a real difference to Nigerians who deserve to be in control of their financial future.