An Idiot’s Guide to Bitcoin: the man behind the book

The man in the beanie and glasses, sipping a flat white, looks very at home in amongst Sydney’s Bondi crowd. But he is not there to talk to me about the surfing or café culture. We are there to discuss bitcoin, and in particular, the book he has written about bitcoin.

Gustaf van Wyk is man who wears many hats (today’s is a blue beanie). He is architect, designer, artist, bitcoin enthusiast and now, author. An Idiot's Guide To Bitcoin is a book which, he says, “makes it easy for the average man to get involved with bitcoin.”

 But how did a man, who comes from South Africa and started out studying architecture, come to write and illustrate a book about digital currency? For a start, it came down to passion. “What made it possible for me was that I was passionate about it. I can’t do anything I’m not passionate about,” he says. It was for that reason that architecture fell by the wayside because he was not able to “sit at a desk and draw line drawings for someone else for ten years.” He began freelancing and bar tending but it was bitcoin that got him “really excited.”

“I discovered bitcoin about two years a go,” he tells me. The way he discovered it, he says, “is an interesting story,” and one which started out on the Silk Road, the underground website, known for being an online market for drugs, aka the “ebay for drugs”. The site accepts bitcoin and this was where Gustaf was introduced to it, although he could instantly see its potential was a lot bigger than the black market. “I have a bit of an alternative view on life and I could see through the fact it was drugs and that caught me and I thought this is really interesting, and I took it from there.”

His alternative view stems from the belief that “the use of force has no place in human society.” Once we are on this subject, his eyes light up and it is clear this is one area he is passionate about. “Bitcoin immediately to me was the removal of force from economics. It comes down to volition and mutual consent. There are no third parties, no pressure. I’ve always wanted something to fight for and there are so many causes and you do your bit here and there, but nothing was really an umbrella cause, and bitcoin became that for me. Through bitcoin I could see a better world. I’ve never been able to project a better world through any other projects that have come my way. Bitcoin was that – I immediately started learning as much as I could and finding out what was going on and getting involved. In fact I only used Silk Road twice and after that, then I started buying bitcoins and trading them,” he says.

He admits to initially making “a bunch of money,” just through bitcoin’s value increasing as he first bought them when they were around $10, but he says, “I quickly realised, you can’t treat bitcoin as a commodity. It really is a means of trade.” Is he one of the “bitcoin millionaires”? No. “I spent them too quickly, I was too enthusiastic,” he laughs.

He is, however, a libertarian. He seems hesitant at first about labelling himself as such. “There are a lot of connotations of words,” he explains, but then he nods and is certain. “Yes, absolutely. Yes, I am a libertarian. As far as the root of the word libertarian, as in liberty and freedom, then yes I am a libertarian. I think mankind only has one right and that’s freedom; all other rights are derivatives of that right.”

Some of the things he says seem to follow the same school of thought as the bitcoin evangelists, people such as Roger Ver and Erik Voorhees. He agrees. “But one my big influences, which I am proud to admit, was Ayn Rand, growing up: her theories on objectivism and the basic human right of freedom, and how she arrived at that point, where objectively our minds are our survival mechanism. We don’t have claws, we survive with our minds and therefore we have the right to use our minds. That’s where it comes from for me… The freedom to do what I want, as long as I don’t violate that exact same right of someone else."

"It came down to a very simple truth and that is freedom and bitcoin was that, and when I saw that, it was so exciting.”

It was, he admits, like an epiphany, although he laughs, “There was no moment. It was probably over a matter of weeks, but by the end of those weeks, once I had really cleared up what bitcoin was in my mind, and I had gone through it, I knew it had to be driven as hard as it could.”

So, today that is exactly what he is doing and An Idiot’s Guide To Bitcoin is his way of doing it. The 100-page e-book, available from his website, first establishes, “what is money?” by giving some context and background, before taking the reader on a light-hearted, and at times humorous, journey into the world of bitcoin.

What makes this book even more unique are the beautifully-drawn illustrations, which are interspersed throughout, usually at the start of each chapter. “That was the most fun part,” he says. “Some of them are a little bit cryptic, just a bit of fun to add my own flair because I am an artist. I think I did about one hundred drawings before I chose the right ones.” He tells me he might add some more and he has left himself open to do that, by publishing this book as version 1.0. “Bitcoin is a new thing and it is growing. I can’t release a book and sit on it. But that’s part of the fun, keeping up with things.” When I ask him about that point, about how quickly the bitcoin ecosphere is evolving and how the statistics are becoming outdated, he smiles. “The phrase ‘at the time of writing’ comes up often,” he says.

Illustration by Gustaf van Wyk

Within the book there is a little history, a sprinkling of statistics and importantly, some practical information about how to use it, including useful websites and simple explanations of much of the terminology surrounding ‘crypto-currency’. “If you read the book with no technical background, apart from knowing what the Internet is, you will understand it,” he says.

Simplifying the concepts was very important to Gustaf, especially as he comes from a creative background and, by his own admission, the two worlds, of art and finance, are often very separate. “We don’t really know too much about finances, especially when it comes to the bigger vocabulary of accounts and things,” he says. This is where bitcoin taught him a valuable lesson. “You assumed money was a complex thing,” he says, “and through bitcoin I learned money really is not a complex thing and it shouldn’t be a complex thing. They hide so much from us through complexity and then you just accept that you do not understand it. Then the question came to me: What is money really then?”

This was the question that inspired the first two chapters of An Idiot’s Guide To Bitcoin and really got him thinking about how big the financial industry has become, quite literally. “The tallest buildings in the city are always the banks, when money is really just a facilitation between two parties. It has become a third entity, this powerful thing in the middle, and bitcoin to me was back down to the basics of what money is: just a facilitation between two traders, people who have value to offer.  It becomes an exchange of value with no strings attached and then I realised that people need to understand that money is not complex and I wanted to show them that, and bitcoin was the vehicle.”

He even says his third chapter, outlining what bitcoin is, comes down to a simple idea that, “bitcoin is money.” He adds, “Everyone tries to describe what bitcoin is on the Internet and everyone has a different little phrase or solution but at some point, you don’t need to understand what it’s all about, you just need to know that bitcoin is money.”

But what about the future of bitcoin as money? Gustaf believes it will not necessarily be smooth sailing. “The nature of bitcoin threatens the nature of the world right now: all this banking and all these centralised powers. If bitcoin is going to succeed, they stand to lose a lot of that power. I realised if bitcoin is going to have its day in the sun, it is going to have to stand its ground to these people at some point. That fight will come because these central banks, they are not going to go silently into the night, why would they?” It is another reason behind his writing An Idiot’s Guide To Bitcoin. His “effort,” he says, to promote bitcoin to the wider public, “because I believe our only hope for the survival of bitcoin is if it grows, if enough people use it and if the bitcoin economy grows."

The banks and central authorities are not the only obstacles, he believes, facing bitcoin. Gustaf thinks the issue will be wider than that; that the struggle is going to be “with the Western world.” He explains, “Because I’m from Africa, I pay a lot of attention to what’s happening there. The developing world is absolutely poised to pioneer this revolution, if you want to call it that, because their national fiats are inflation-ridden, over-taxed and over-controlled; the places with the highest buy into bitcoin is the developing world.

“Then you have the western world, who are complacent, who are comfortable, who are kept that way and who don’t have an immediate, on the ground need for bitcoin, where the developing world do.”

It is those parts of the world where he is keen to go and do more work. He talks about bitcoin wallet, Kipochi, and its integration with M-Pesa, Kenya’s hugely popular mobile payment system (used by over two-thirds the adult population there.) He hopes that it can take off in countries such as India. “If it can go viral in India then a sixth of the world’s population will accept bitcoin. That would be wonderful. These are the places I would like to work and do more promotion,” he says. 

“Maybe it is time for the developing world to be the pioneers in something.”

For Gustaf, there are many other avenues he would like to explore and he is not afraid to admit one of the reasons he wrote the book was because he needed to make some money as well. He announced the sale of An Idiot’s Guide To Bitcoin just a week a go and already has had over 100 sales. He tells me he is making just enough to survive on while being able to promote the book and work on his other “bitcoin endeavours”. One of those involves hosting a free “bitcoin for beginners” event in Sydney at some point in the future. He is also looking into getting a physical version of the book printed with the help of crowdfunding.

Finally, I ask him how he envisages the future for bitcoin. He laughs and looks a little sheepish. “I don’t know if I should admit this. The full potential of bitcoin is beyond our imagination. I don’t think we would recognise the world that we live in because if you think about the main purpose of political borders — to protect national economies — if everyone is trading in a global economy, those borders become obsolete. I think about the world John Lennon asked us to imagine …  I think the concept of one world economy that is not centralised is so massive, that we can all live as one.” So does he think John Lennon would be in favour of bitcoin? “Absolutely,” he says. “I don’t doubt that for a second!”

Gustaf’s own enthusiasm for bitcoin is contagious and it’s fair to say, the bitcoin world has probably not heard the last of him.  “The book is really just the beginning,” he says. “I’m just testing the waters.”

By Louise @ Bitscan

Bitcoin: The game-changer for the art world?

The romanticised notion of the starving artist may be a cliché but the fact is, unless you are one of the Damien Hirsts of this world, many artists struggle to make ends meet purely from selling their artwork. Finding a platform to sell their work, to get publicity, and take their work to a global audience can prove insurmountable tasks to the new creative on the block. Apart from costs of materials, marketing, exhibition or selling space, not to mention time and effort, these days you also need to factor in the additional costs of credit card transactions, bank fees and currency exchange when trying to expand the market abroad.

This is where bitcoin is offering a lifeline and the art world is starting to take notice. Since Art4Bit stepped into the bitcoin ring in February providing a platform for artists to sell their work for alternative currencies, a growing number of artists are learning about how accepting bitcoin can help promote their work and increase their profit margins.

It is perhaps unsurprising that artists and creative types are turning to using a decentralised currency. Some of the characteristics of both are strikingly similar: transcending the barriers of language and not suffering from being devalued. It is a unique example of art and science uniting with a common goal: freedom.

Speaking to Carla from Art4Bit, she says, “Bitcoin was born as a free currency and we think artists could profit from this liberty. Bitcoin does not have boundaries, and in this way, art also would not.”

On the Art4Bit website, artists can display their work and sellers can purchase it directly from them online for digital currencies, with Art4Bit taking a small, random percentage of the cost (anything between two and 20 per cent.) Artists dictate their own price for the work and if required, Art4Bit can offer free advice from a consultant or lawyer to help them value their work, thus helping to “sustain artists in giving a value that they think is fair,” says Carla.

It is part of their mission for a more ethical art market to flourish. The lack of banking fees is a clear benefit and people looking to use Art4Bit as a way of getting noticed have been attracted by the without-borders approach the company promotes. “The internationalisation of their work seems to be one of the most important elements,” says Carla. “When they hear about bitcoin, they seem very open and faithful to its uses, even if they don’t know exactly what bitcoin is. They obviously want to understand.”

Despite in their own country of Italy, adoption of and interest in bitcoin is negligible, Art4Bit say there is “a slow increasing interest and knowledge about the use of bitcoin in the art field… There is opening discussion about how bitcoin can be used.”

Having just travelled around the world raising awareness of their site and promoting their ideas to artists, they have a good gauge of how open artists are to using a decentralised currency. “In both [Japan and Hungary] we found several artists who already knew about bitcoin and would like to collaborate with us,” Carla says. “We have also received interest from artists in India and the US who are ready to collaborate.”

There are plenty of other examples as well. The ecommerce site, Etsy, known for its vendors selling vintage, art, and handmade craft items, currently has just shy of 180 sellers accepting Bitcoin and a members’ community dedicated to those that use it. One such vendor is Tracy Smith who owns Vancouver Stain Glass.

She says right now she only has one item for sale, which can be bought with bitcoin but she is enthusiastic about the currency. “The reason I chose bitcoin is I used to be an accountant and have studied economics. I like that it is an independent source of trade, and is not reliant on countries, elections, economies or the markets. It is brilliant. I also read that the value of a bitcoin never goes down, only up. This is the same as art. The value never goes down. It is recession-proof.”

Designers, photographers and printing shops are also getting involved. In Barcelona, Tostadero recording studio offers 10 per cent off if you pay in bitcoins. Bitmagination allows photographers and designers to sell their work for bitcoins, promoting their philosophy of a free market.

In fact, Art4Bit believe bitcoin could be a game-changer in the art market. “Bitcoin could free art from geographical boundaries, making it easier to move, digitally and physically. The art market could also gain a more personal dimension,” says Carla.

The personal dimension comes from allowing artists to interact directly with the buyer. “We want to help artists have a favourable relationship with the public and with the buyers, very different to the methods of some art galleries,” Carla says, adding, “Artists could be free and at the same time, be more visible.”

Art4Bit, who are holding their first exhibition in Milan next month, believe the benefits do not just flow one-way, and art could also be mutually beneficial to bitcoin. “Art is one of the most valuable and least devalued goods and thanks to this, it can help bitcoin to stabilise and increase its worth,” explains Carla.

Suddenly the science of cryptography is uniting with art. Bitcoin and the Internet are starting to link people across the globe and nurture new markets in a very non-technical domain. 

By Louise @ Bitscan

How likely is a decentralised exchange for bitcoin?

There is no doubt that for some, bitcoin is more than just a currency, or a commodity, it is an ideology. Its fundamental characteristics of being decentralised and open-source, and its disruptive nature, appeal to the libertarians out there.

Yet, when it comes to exchanging bitcoins, the majority still have to go through a third party; one of the exchanges, or a broker, who all take their cut. Even the partly-decentralised exchange platform of local bitcoins still requires users to go through a company-owned website, so for some bitcoiners, and not just the purists, a fully decentralised exchange cannot come soon enough.

It is a topic, which will be discussed in a panel at next month’s European Bitcoin Conference taking place in Amsterdam. One of the panel members is Mike Hearn, software developer for Google and one of the brains behind much of the bitcoin technology for Android. When we interviewed him, we touched on his first introduction to bitcoin and his dealings with Satoshi (see our earlier post) during the very early days of the currency, but soon moved on to his thoughts about decentralised exchange.

The problem is that centralised exchanges are financial institutions, which have to interface with the banking system, the one system bitcoin tries to remove. However, “they’re not going anywhere,” Hearn says, stating that, “if you want to move large sums of money they are the best way to do that.”

A direct, peer-to-peer exchange system sounds good in theory but in practise, Hearn believes there are limitations, and it comes down to trust. “It becomes very difficult to do this swap in an entirely fraud-free way,” Hearn says. “Someone always has to go first, and whoever goes first risks losing out... You can’t swap money for bitcoins atomically.”

Hearn explored some way of instigating a decentralised exchange system using social networks at the London bitcoin conference last year.

However, he says not too much has developed since then because “the centralised exchanges are working.” Despite the banking system being “slow and expensive” he says, “It is hard to get around that as your money starts off in the banking system.”

In a bitcoin utopia, the main exchanges might be redundant but Hearn thinks that is a long way off becoming the reality. “It is not clear the decentralised exchange concept is going to work very well so for now I don’t see them going anywhere.” He refers to the fact that even if a person were to try to trade through a social network via the internet, every movement peer to peer, would go through the banking system with the banks taking a small fee. He also raises the risks of taking part in a decentralised exchange system. “The assumption is that banks won’t figure out what you’re doing, and why you’re suddenly sending and receiving wire transfers. What we’ve seen is people getting their bank accounts terminated because banks view them as a money transmitter and abusing the banking system.”

Of course, some people circumvent some of these problems by meeting up face to face to trade small amounts of cash but the issue is how to scale that up. “A decentralised exchange would marry the best of both worlds,” Hearn explains. “You could have the scale of a standard exchange but with the decentralisation of in-person trading.”

One UK company has announced its plans to create a decentralised exchange for fiat and crypto-currencies. Metalair is looking for investors and donors for what it claims will be a “double-spending proof, fully decentralised exchange mechanism” for its open-source software. It is also hoping to promote the adoption of all cryptocurrencies by providing an exchange for bitcoin and litecoin as well.

Despite Hearn believing the future of bitcoin is bright, he is not quite as enthusiastic about that of other alternative crypto-currencies. When asked about such digital currencies as Litecoin and Feathercoin, he seemed sceptical. “Most alt coins haven’t introduced any compelling technical changes and I don’t see any reason why they’d be competitive in the long-term,” he says.

Mike will be speaking at the European Bitcoin Convention, which takes place from September 26^th – 28^th. 

By Louise @ Bitscan

Life On Bitcoin: An Exclusive Update on how Austin and Beccy are Doing!

Remember the couple we told you about (here) who are attempting to live solely on bitcoins for the first three months of their married life? Well, Austin and Beccy Craig are now two weeks into their life on bitcoin experiment and we thought it was a good time to check in and see how it is all going.  This is what we discovered...

The couple from Provo, Utah have been documenting their bitcoin endeavours on their website and faceboook page and are hoping to turn the whole adventure into a documentary. So how are they coping so far and has the experiment changed the way they think about bitcoin?

Q. So, nearly two weeks into living on bitcoin, can you sum up in one sentence, the experience so far?

- We both knew "Life on Bitcoin" would be challenging, but we've been surprised at the ways it has challenged us.

Q. What has been the most difficult item/service to buy with bitcoin?

- So far, my efforts have been focused on finding a data plan for my cell phone. I'm sure there are other things that are just as difficult to buy on bitcoin, but the cell phone is critical. Kashmir Hill, the Forbes reporter who lived on bitcoin for a week in San Francisco, said "it would have been near impossible without [her] data plan". Without a cell phone, or without a digital interface, it's impossible to demonstrate the digital currency we're using. It also makes coordinating with Beccy, the film crew, and the local businesses I'm meeting with a nightmare. Once the cell phone is in place, I'm hoping things will become a little more manageable. 

Q. Is there anything critically important yet to buy?

- The aforementioned cell phone, and auto insurance. We legally have to have insurance. We've found one agency that will accept bitcoin, but we're trying to find someplace that won't break the bank. Still shopping around.

Q. What have you found to be the easiest thing to purchase with bitcoin?

- Oddly enough, food. We're not starving. La Nay Ferme is a local farm that contacted us before we even got started, and we're picking up produce from them every week. Local restaurants have been receptive, because many of them already have a smart device at the point of sale, plus in restaurant wi-fi. We thought we might starve, but I'm pretty sure I've gained weight.

Q. What has been the most surprising thing that you have found to be able to buy? 

- There are several companies offering gift cards that are usable almost anywhere, so if you're willing to use a go-between, you can buy from virtually any major store or chain. We were also surprised to see that Etsy offers payment options to their vendors to accept bitcoin. That's a site we've known and loved for years, and it's great that their opening up options for the merchants who sell there.

Q. How has trying to live off bitcoin changed the way you live over the past two weeks?

- Compared to before we started, I find myself much more tired at the end of every day. Trying to persuade businesses to accept bitcoin is a lot like sales jobs I've had. There is a lot of emailing, calling, talking to store associates, and trying to find the decision maker and plead the case for bitcoin. And it isn't over when we go home, so in that sense, we don't get any breaks. But maybe I'm tired because I just need to exercise more.

Q. What has the funniest reaction been so far when you have asked if you can pay with bitcoin?

- On our first day, when we were coming back from our honeymoon, we borrowed a phone from somebody on the train to called cab companies for a ride home from the train station. Most just said we can't accept whatever-it-is-you're-talking-about, but one person began to point out what poor decisions I'd made. "You've just come back to the United States, and you don't have any cash? Why didn't you bring any cash? You're not using a credit or debit card? That wasn't very smart, was it? Wouldn't this be easier for you if you used a card? Digital currency is fine for the Internet, but you're in the real world." It was like talking with an uncle who wants to give advice to a confused kid. 

Q. In general, how have people responded to your pleas to take bitcoin?

- In general, people are referencing whatever scant information they have about bitcoin, and they listen with a healthy level of skepticism. But we've found that new business owners are generally more ready to make changes, rather than the business that's been around for decades and have no interest in changing. 

Q. What have you discovered about the bitcoin community during this adventure so far?

- It's a fantastic group to be a part of. They're extremely supportive, smart, and they keep us focused. Feedback on what we should or shouldn't be trying is helpful, and they almost always respond well to communication from us. 

Q. How did family/friends react to your challenge and how much are you relying on them during this time?

- We're trying to not rely on them at all, but that's been one of the unexpected challenges. It's been hard to try to turn away the kind gestures of from people who care about us. We live in a tight knit religious community. Beccy and I have lived here for years, and both have a lot of friends and family here. A few days ago we caught Beccy's parents trying to stock our fridge with groceries while they thought we were gone. We made them promise not to try that anymore, but it's been a funny problem to have, trying to turn away my family, her family, and our friends, who all really want to help. 

Q. You must be having to do a lot of research, travelling and meeting people, what is the most random/funny/interesting mini adventure you have had over the past two weeks?

- Filling up with gas has been the most interesting adventure so far. My truck was getting lower on gas, and so was Beccy's car, but we had enough gas to drive to the Phillips 66 west of Salt Lake International, an hour from where we live in Provo. An employee there, Furb, agreed to help us buy gas at the station. It's at an industrial park way off the beaten path. There weren't many street lights, and we said (only half kidding) that we were going to get mugged. When we found it, we chatted with Furb for a long time about his use and involvement with bitcoin. Great guy, and very representative of what we've seen in the bitcoin community. We filled up the tank on my truck and two extra gas cans, got a much needed car wash, and grabbed as many snacks and grocery items as we could. We weren't sure it was a good idea at first, but it ended up being really fun, and hopefully we'll be back to talk to Furb again soon.

Q. Getting married and then putting yourself under financial strain would be difficult in any relationship - how are you coping and getting on as a couple?

- As a couple, we're great. Beccy is the most supportive woman in the world, and it helps that she's witty and fearless and fun too. I think our individual backgrounds help as well. She's been a small business owner for years, and I've worked in technology, entrepreneurship and marketing for a long time. We're both comfortable with changes and challenges. We wouldn't have gotten into this project if we thought it was a threat to our marriage. We know each other well enough, and have a strong enough relationship, that this won't hurt us. If anything, the hope is that the challenges we face will bring us closer together. 

Q. What are you discovering about yourselves throughout this experiment?

- I'm discovering that I'm not the salesman or techie that I wish I was (both qualities that help a lot).

Q. From what you already knew and your experiences now, do you think bitcoin has a viable future as a successful, global currency?

- I was optimistic about bitcoin from the onset, and I still am. If you looked at the Internet in the early 90s, it would look a lot like bitcoin. The users are technically capable and sometimes culturally fringe. They see the inherent potential of a new technology, a fundamentally different architecture, even if it's years or decades away. We're not even 3 weeks in to Life on Bitcoin, but we've been contacted by bitcoin enthusiasts in South America, Australia, Europe, Asia, and we're planning to contact the active bitcoin community in Africa soon. I'm very bullish on crypto-currency. 

Q. Finally, you are putting bitcoin through its paces here, is it standing up to the test?

- The technology is robust, secure, and totally stands the test. The infrastructure around bitcoin has a long way to go.

Thanks to Austin for taking time out from hunting for bitcoin data plans to talk to us and good luck for the rest of the ride!

By Louise @ Bitscan