An unusual event is being held tomorrow, Saturday 13th December, at the Paradiso Cinema in Ubud: the International Bitcoin Film Festival. Catriona Mitchell spoke to one of the key organisers, Gary Dykstra, about the basics of Bitcoin, to find out why it’s significant and why it’s taking off in Bali. A technology veteran, Gary is spearheading Bitcoin adoption in Ubud and hosts the weekly meet-up BITCOIN FILTER.
Gary, like many people I’ve heard of Bitcoin, but have no real concept of what it is or how it works. Do you have a way of defining it in simple terms, for those folk who aren’t technologically savvy?
Yes. The first way to think about Bitcoin is just like another currency, like the dollar and the Yen and the Euro. Bitcoin is just another currency like that.
Sometimes I say, if the Internet were a country, then Bitcoin would be its money. If you think about electronic banking, you never actually hold most of your money in your hand; it arrives in your account from your employer, and you pay your bills online and you never actually have the physical. You’re just keeping track of who owes what. It’s the banks and the banking system that’s keeping track of who owns what money.
Bitcoin is very similar, only you replace the banks, the employees, the buildings and everything, with this little bit of code that anyone can run on their computer. And all of those computers, when you join the system, communicate with one another and they all collectively keep track of who owes who what. Voluntary participants are keeping track of what money belongs to whom. Essentially it replaces the banking system with computer code.
That sounds quite revolutionary.
It is. On the face of it, and as far as Silicon Valley is concerned, it’s just a payment technology. It’s really good for that. But it’s also a repudiation of the entire global financial system as we know it.
Did Bitcoin evolve in response to the global financial crisis?
Yes, it was born out of the financial crisis. It began in January 2009. But clearly someone had been thinking about it for some time before that.
First of all it was just an idea, a white paper where someone said this was a good idea on a message board on the Internet. The paper was published under a pseudonym and we still don’t know who this person was – there’s a mysterious founder and no one knows his true identity. But everything was created in an open way – the rules of the system are all transparent. He and the people he was corresponding with on this message board created it, and set it loose on the Internet, and it has taken on a life of its own.
Presumably it got traction because so many people were suddenly appalled by the behavior of the banks?
Yes. Its time had come. There had been other attempts at a technological solution to money before this, and most of the independent efforts failed, because there was a single entity that was trying to push it. Bitcoin was fundamentally different because there’s no Bitcoin company, and this is what’s fascinating about it: it’s almost magic. There’s no central authority.
I have a problem computing that!
It takes a while to get used to. It’s a new way of thinking about money and how it could work. There’s no central authority, there’s no Bitcoin company, there’s no 0800 number to call when there’s a problem. There’s just a set of rules and a bunch of voluntary participants.
Sometimes it’s easy to think of it as email. It’s just a set of rules. If I have gmail and you have yahoo email, we can exchange emails because we’re following the rules of email. The conventions. Because we agree on how it works, I can send you a piece of information. Bitcoin is the same; it’s what’s called a protocol, it’s a set of rules, and everybody participating is following the rules.
So what are the key advantages for users of Bitcoin?
For one thing it’s far less expensive to send money using this system. And it’s also far more effective if you want to trade with anybody on the planet. There’s an interesting story with a very talented computer developer in Myanmar: he was doing work for people all over the world, he had a client in New York who tried to pay him using PayPal, and for political reasons he couldn’t get the PayPal payments in Myanmar. Now that Bitcoin exists, any individual person can pay any other individual person for anything at all, and there’s no way to restrict that trading of value.
What about user fees – how do they work?
Rule of thumb: according to the traditional banking system it costs 8-12% to move money around internationally, for the fees, the exchange rates, the float, the delay… There’s actually a conflict of interest there. It’s in your interest to pay as little as possible and get the money there as quickly as possible. But the global banking system relies on the friction to make money; they stick themselves in the middle and they charge a lot of money.
Then you look at Bitcoin, and it costs about 6 cents per transaction, no matter what the amount is, and when you think about it, there are no buildings to buy, there are no employees; all of that is gone, so the expense is far less.
What about the risks? Is the value constantly fluctuating? And if there’s no 0800 number to call or no backup system…
Those are the problems that the community is trying to overcome now. There is work to do. There will be a company that will give you an 0800 number to call. There are companies arising that will assume the risk, so if your computer gets hacked, they’ll pay you back. There are companies that will help you hedge the volatility. The uncertainty and risk that goes away with Bitcoin, is the money supply. With regular money you’ve got the risk of a government devaluing that currency. This can happen anywhere, and it’s actually observable that America is moving down that path now.
Do you have an estimate of the number of Bitcoin users worldwide?
That’s actually very difficult to estimate. It’s tens of thousands if not hundreds of thousands of people. Between 40-50,000 businesses worldwide accept Bitcoin. It’s a nebulous figure, but you can get a sense of the scale of it. There are websites that track the businesses that accept Bitcoin – you can see which ones are in Ubud for example.
How many are there in Ubud?
There are over 20 in Bali with many in Ubud. One example is the Viceroy Hotel, which just began accepting it. There is also Kizmet, the Onion Collective, Tabra Jewelry. You can even go kite surfing in the Gillis.
Ok, let’s take the Viceroy. If I book a room there I can pay in USD, Rupiah or Bitcoin – is that correct?
That’s right. When a client goes to check out, say they owe $1000 for a room, the system does a real-time look-up of the Bitcoin price on the international market, and presents the price for that moment. And the customer uses their smartphone to send the bitcoins. Viceroy’s system then acknowledges the payment.
You’re very active with Bitcoin in Ubud. Have you come across a lot of interest here?
Part of what we are trying to do in Ubud is build a Bitcoin economy. When I arrived in Bali in Feb there were no businesses, there was no action, we had meetings and nobody came. It’s really amazing the community that has blossomed since. There are people who get together every week and we talk about the latest news and what’s happening and how to build the community.
Tell us about the film festival planned for tomorrow?
It’s an international film festival that has screened in Buenos Aires, Amsterdam, Seoul… and this is the screening for Indonesia. There will be 15-16 different films; little animations and shorts that educate about Bitcoin, little documentaries about people using Bitcoin in Africa, for example, and then a feature length documentary that tells the last two or three years of Bitcoin. It’s been a roller coaster; there have been lots of fascinating stories… about companies that have got in trouble with the law, about the mysterious founder, for example.
When people come to this festival, do they pay in Bitcoin?
They can pay in Bitcoin or with regular money. We’re going to be in the lobby with booths so we can help people get Bitcoin or ask questions… we’ll be in the lobby all day answering questions. It they wanted to they could show up, get some bitcoin and pay for their movie ticket with bitcoin.
How do you see the future of Bitcoin?
I’m very interested to see how the world changes when we all use a fair form of money. When it’s not controlled by just a few people based on their policy decisions – but it’s based on a voluntary system where everyone has agreed on the rules of the system by participating. All money is trying to do – or should be trying to do – is measure reality. As a unit of measurement, it should have integrity.
You seem to be breaking open a new psychology of money, which is no small undertaking.
That’s right. And it probably wouldn’t even be possible if there weren’t so many shenanigans going on now with the global financial system. That small group of bankers, they’re not really holding up their bargains in society now, and that’s why people are taking a look at alternatives.
It’s quite the story, isn’t it!
It is! It’s like science fiction, but it’s real.
A technology veteran with more than 20 years’ experience in software, Gary Dykstra first discovered Bitcoin in 2011 while working on Internet payment systems in the video gaming industry, and immediately saw its potential, because of its transparent, fair way to handle money and payments. He now devotes his efforts full time to Bitcoin-related projects. Gary is spearheading Bitcoin adoption in Ubud and hosts the weekly meet-up BITCOIN FILTER, focused on the basics of Bitcoin.
To see which which businesses in Bali are using bitcoin, see http://coinmap.org/
To become part of the Ubud Bitcoin community, and for more information on tomorrow’s film festival, see https://www.facebook.com/groups/bitcoinsinbali/
Tomorrow’s film festival will be held at the Paradiso Cinema, from 12pm onwards. The schedule is as follows:
12:00 – 13:00 Lunch at Down to Earth Organic Cafe (Adjacent to Paradiso Ubud Theatre)
13:00 – 14:00 Lobby Doors Open
14:00 – 14:15 Film Festival Kickoff
14:15 – 15:00 Animated Film Shorts
15:00 – 15:30 Break
15:30 – 16:30 Short documentaries
16:30 – 17:00 Break
17:00 – 17:30 Meet the Film Makers – Documentary Trailer and Q&A with the Film Producers
17:30 – 19:00 Break – Down to Earth Organic Food Dinner & Snacks
19:00 – 19:30 Take your seats for main Feature. Get your popcorn. Sponsor Message.
19:30 – 21:00 FEATURE FILM – The Rise and Rise of Bitcoin incl. message from director
21:30 – 24:00 Delicious Onion Afterparty & Bitfilm late night screening