Editor's Note: In this series, we take you inside the mind of Nicolas Cary, CEO of the popular Bitcoin wallet service Blockchain.info, for his expert insights on the latest Bitcoin news and trends.
Outspoken investment renegade Jim Rogers is famous for “putting his money in places that most others will not dare go.” Russia. China. But, nope, not Bitcoin. Rogers says he missed that boat and regrets it. (He’s a billionaire. He’ll survive.)
Why didn’t he jump on Bitcoin? Because, like so many people, he doesn’t fully understand the digital currency.
"If I were smart, I would have bought it in the early days when people first told me about it,” Rogers told the China Money Network last week. “I still don’t know enough about it to invest in it.”
If you think you missed the Bitcoin boat, too, you’d be mistaken, says Nic Cary, CEO of Blockchain.info, a popular U.K.-based Bitcoin wallet and block explorer service. It’s not too late to invest in the booming cryptocurrency -- one that he fully expects to forever change the world. The problem is a lot of people still don’t know what Bitcoin is, how it works and what it can do.
We talked to Cary about how he unravels the confusing digital money for beginners, the security of the Bitcoin network and how it differs from cold, hard cash.
Related: 3 Big Misconceptions About Bitcoin
Entrepreneur: How do you explain Bitcoin to people who still don’t understand it but want to?
Cary: “What is Bitcoin?” is a question I get asked all the time. The simplest way to explain it is: Bitcoin is a payment network.
Just like the rails that support credit card payments, like Visa or MasterCard, but it’s also a currency that lives on top of those rails. It’s not controlled by a company or an institution, though, just like email isn’t controlled by one company, although anyone can build services on top of it.
The winners of 2014, in terms of the companies that will be most successful, are the ones that can break through the education barrier. You use email every single day of your life, but you probably don’t necessarily exactly how it works. But it’s useful to you because it lets you send correspondence to and from your friends and your loved ones instantly, basically for free.
If you understand that utility, then you can understand the promise of Bitcoin, which is to allow you to instantly transact with anyone in the world basically for free, without a counter party, without an intermediary, without relying on a bank or an institution.
Entrepreneur: How safe and secure is the Bitcoin network?
Cary: The people who like to store cash under their mattresses are the perfect people that should be looking at Bitcoin because, depending on how you secure and store your bitcoins, you are actually firmly in control of your funds.
The biggest difference between Bitcoin and cash you keep in a bank is that, if there’s a run on that bank or the bank corrupts or goes down or the people running it or unethical, that money can be gone forever. But with Bitcoin there’s no counterparty risk. That means you can control and manage your funds, just like hiding them under your mattress, and if certain precautions are taken, no one can steal your money. No bank can steal it. No robbers can steal it. It can’t be taken right out of your wallet or your bank account. There are no fees. There are no minimum account balances. None of those things.
In terms of the security of the network, Bitcoin has now been around for five years. There has never been a protocol level or technology level security flaw or failure. Individual services and companies that have built and centralized custody over users’ funds have had problems and that’s just the same as banking in the old Wild West.
Related: Why Bitcoin's Future Is Bright
If you build a bank and you surrender value into that, you better hope that company is very well run. You better hope that they actually have the reserves they say they do. But with Bitcoin it’s different. You don’t have to trust a service like that. You can set up a wallet on Blockchain.info or download open source software and run it locally on your computer, or even print a QR code and create what’s called a cold storage wallet, and you can send money and keep it offline, hidden in a vault or underneath your mattress. You don’t have to trust anyone except yourself.
Entrepreneur: Is it too late for people who haven’t already invested in Bitcoin at this point?
Cary: I’m not a financial advisor, but I can say that I think that rule No. 1 is don’t invest in things you don’t understand, and never invest more money than you’re willing to lose. If you look at Bitcoin, you study it, and understand the value proposition of it, then buy a few bitcoins and watch it. That’s a fun way to participate, though no one has to throw their net worth there or their college savings for their kids.
If you had done that a few years ago, you would have absolutely been in a stronger financial position today. People say, “The price of Bitcoin is so high right now, I think I’ve missed the boat.” In reality, it’s so tiny still. The market cap of Bitcoin is, like, $7 billion. The average skyscraper in New York City is worth more than that.
So there is so much more upside here to investing now. The best time to plant a tree was 20 years ago. The second best time to plant a tree is today. We are just in the very early stages of the Bitcoin economy and the digitization of money is an inevitability.
We’ve seen it happen in lots of other things that we used to have that were tangible. Thirty years ago, you used to send mail to your friends and family in order to send them messages. Now we use email. You used to go to record stores and buy those crazy big round things and now we download music digitally online. Same with movies. Same with books.
It should not be a big surprise that money will go digital. When your kids get older, it’s going to be an expectation that their money is digital and they’re going to think that we were crazy for running around paying for things with dirty bills that had strange, old dead people on them, that they could lose or could burn or, if they got them wet, they were destroyed.
Bitcoin is much better way of transacting internationally than cash is. Trust me, even if we can’t convince all of the people in the world about it, the younger generations are totally going to adopt it, just like they’ve embraced all things digital.