As the first decentralised digital currency, Bitcoin claims to be ‘changing finance in the same way that the web changed publishing’. If so, then pro audio is lined up for another game change on the scale that digital audio wrought on the recording industry and online distribution wrought on record companies.
That’s no small claim, but the signposts are there for those prepared to follow them. So, who is onboard for the ride?
With their uptake of Bitcoin, plug-in pioneer Waves and MAS Music Productions appear to be the first audio companies to acknowledge the coming changes. Singer Lily Allen probably wishes she could contest their claims, however, having recently Tweeted: About 5 years ago someone asked me to stream a gig live on second life for hundreds of thousnds of bitcoins, "as if" I said. #idiot #idiot
Taking a step back, Bitcoin is a digital currency introduced by Satoshi Nakamoto in 2009. The vision of its ‘pseudonymous developer’ is of a peer-to-peer currency that sidesteps traditional clearing houses and institutional control – avoiding set-up fees, heavy transaction fees and the need to validate accounts with personal details.
The currency supply is governed using an open-source program called Bitcoin Miner ‘at a limited and predictable rate’, and it can be used for purchasing and traded for various currencies, including US dollars and Euros. Digital currencies (there are others) are not produced by government-endorsed central banks nor backed by national currency – money’s core concepts, along with institutional control of supply, and of how and where it is used. At present, most banks do not offer services for digital currencies, and some refuse services to virtual-currency companies. But this seems inevitably to have to change.
Notable users of Bitcoin to date include WikiLeaks, which uses it to dodge the financial blocks put up in the wake of publishing leaked US Embassy diplomatic cables, and online marketplace Silk Road, which was closed down when it was discovered to be hosting deals for sex and drugs, and the hiring of hit men.
If you think that this makes digital currencies sound like a gangsters’ paradise, you’re not alone. It is, after all, a new frontier. Denmark-based Bitcoin payment processor BIPS reportedly lost US$1m (1,295 Bitcoins) in late 2013 following a series of DDoS attacks on its website; only a month earlier, a prominent Chinese Bitcoin exchange ‘disappeared’ with US$4.1m of its users’ assets in bitcoins.
It should be noted that these – and other Bitcoin bandits’ targets – are service providers rather than users, and their stories tend to go one of two ways. Smaller endeavours disappear, taking funds with them, while larger operations are attractive to security breaches reminiscent of old-fashioned bank heists. There is even a report of a Bitcoin Ponzi scam.
But change on this scale always brings casualties – ask any of the major record labels or major international recording studios, if you can find them. That doesn’t mean it will go away – as reported in The Economist: ‘Germany has recognised it as a “unit of account”. Ben Bernanke, chairman of the Federal Reserve, told a Senate committee on virtual currencies that the idea “may hold long-term promise”. A small but growing band of shops and firms accept payments in bitcoins…’
Bitcoin is a cryptocurrency, so-called because it uses cryptography to control the creation and transfer of money. Other current cryptocurrencies (or altcoins) include Litecoin, Peercoin/Primecoin, Dogecoin and Namecoin – these and their like (except Ripple, which is designed for financial trading over the internet) are based on the Bitcoin model. Unlike Bitcoin, Namecoin and Litecoin, however, Peercoin does not have a hard limit on the number of possible coins, but aims to maintain a long-term annual inflation rate of one per cent.
Sex & drugs & rock & roll
If Waves is the first manufacturer to embrace digital currency trading, it is in the wake of the reinvented music industry. The first album sold exclusively for bitcoins (on CoinDL) was from US band Alco in April 2012 – before it appeared on iTunes. And in December 2013, former Spice Girl Mel B became the first mainstream artist to sell music using bitcoins. Snoop Dogg is also reported as being interested in using the currency for future releases.
CoinDL is a dedicated Bitcoin site offering music, podcasts, games, videos and sheet music, among other downloads. It was created by David Sterry (author of Introduction to Bitcoin Mining: A Guide for Gamers, Geeks and Everyone Else), who sees it as a route to market for independent artists. ‘CoinDL enables people to buy digital items using Bitcoin, but letting them do it really quickly,’ he says. ‘If things are virtual it can be very easy.’
In 2013, Adam B Levine, Andreas M Antonopoulos and Stephanie Murphy founded Let’s Talk Bitcoin!, an online audio show that offers ‘a platform for those creating the future of money to share their experiences, and discuss their progress’. It is also a platform for the promotion of independently produced music, implicitly associating the two.
Inspired by rapper Kanye West, the creators of the Coinye West digital currency plan to court the music crowd too: ‘I can picture a future where Coinye is used to buy concert tickets with cryptographically verified virtual tickets,’ wrote Noisey, the ‘anonymous cabal of anarcho-financiers’ behind the venture. But while they regard its name as a nod of respect to the rapper’s reputation for innovation, his lawyer, Brad Rose is claiming trademark infringement: ‘Given Mr West’s wide-ranging entrepreneurial accomplishments, consumers are likely to mistakenly believe that Mr West is the source of your services,’ he says.
There is a growing consensus that a cashless society needs something more than is presently offered by our financial structures – something a lot like Bitcoin. Reported in Scientific American in 2012, Bitcoin lead developer Jeff Garzik remains confident of digital currency’s future: ‘How long did it take to create the euro, implement the euro, widely distribute the currency, widely distribute the cash registers, point-of-sales systems – all of that stuff,’ he questioned. ‘It took years and years.’
And it has begun. Earlier this year, a cash machine appeared in a coffee shop in Vancouver allowing Bitcoin transactions – the fledgling currency’s first real-world portal. US commercial developer Jack Sommer, meanwhile, is prepared to take bitcoins as an alternative to the old school US$7.85m he wants for the sale of his Las Vegas mansion – ‘we're expanding our market and adding some notoriety,’ he says.
Beyond finance, a group of hackers is reportedly aiming to supercede the internet with a Bitcoin-style Bitcloud: ‘We will start by decentralising the current internet, and then we can create a new internet to replace it,’ they have said. The proposal for Bitcloud will use similar techniques as are used to ‘mine’ Bitcoins to provide the services that are currently controlled by internet service providers – storage, routing and bandwidth – for payment.
Back in audio world, Tim Moore’s MAS Music Productions facility in Los Angeles began accepting payment in bitcoins in 2013, making it the first recording studio in the world to do so, and it has already been joined by 440 Mastering’s online mastering sevice in Madrid. Time to update the Fast-and-Wide Pro Audio Timeline...
See also:
Waves recognises Bitcoin online payment
Bitcloud developers plan to decentralise internet