Bitcoin could reshape how we view currency and handle financial transactions across the globe.
A year ago, “bitcoin” held little to no meaning for most people around the world. Today, while many are confused about what the cryptocurrency is exactly, a growing and vocal group of proponents are championing it, arguing that bitcoin could reshape how we view currency and handle financial transactions across the globe. To explore this rapidly changing space, Mediabistro held Inside Bitcoins: The Future of Virtual Currency in New York this week. One of a series of bitcoin conferences, the two-day event brought together more than 90 speakers, 35 exhibitors and 1,500 attendees from 26 countries.
Created in 2009, bitcoins are a type of cryptocurrency that function as a digital currency and payment network. Transactions are anonymous and unregulated, which makes the process cheap and easy—but also opens up the system to volatility and security and legal issues. In the opening keynote, Jeremy Allaire of digital currency company Circle stressed the importance of regulation if bitcoin is to reach its potential and move into the mainstream: This would enable commercial banks to create value and invest in bitcoin; give consumers greater protection; and help law enforcement pursue bitcoin-related criminal activity.
Everything from the technology to the industry surrounding it needs to become more sophisticated if we are to see widespread adoption, which could take decades. “We’re in the pre-Netscape era of digital currency,” Allaire said. Yet he foresees a steady rise for bitcoin as startups proliferate and thousands of companies begin accepting the cryptocurrency—although he says we’re still waiting for that “killer app” that makes trading, sending and receiving bitcoins easy for the average person, which is when it will really make an impact.
Nicolas Cary, CEO of bitcoin wallet BlockChain.info, expressed high hopes for bitcoin, citing examples of its growth over the last year. BlockChain.info has expanded from 100,000 bitcoin wallets—accounts that enable users to transact with others—in 2013 to 1.5 million today. Cary’s keynote spotlighted examples of merchants and communities embracing Bitcoin as currency: Café owners from Spain to London are accepting bitcoin to cut down on credit card transaction fees, while some tour guides and cab drivers in Argentina and Chile take the currency. (The currency is big in parts of Europe too, with Berlin’s Kreuzberg district home to one of the highest densities of businesses accepting the currency, according to The Guardian). “Ground zero for bitcoin” is Buenos Aires, said Cary, thanks to the instability of Argentina’s peso, with people doing everything they can to get rid of their pesos.
The value of bitcoin has astronomical potential—if all the pieces fall into place. That was the takeaway from “Wall Street’s View of Fair Value for Bitcoin,” a panel moderated by analyst Lou Kerner, founder of The Social Internet fund. One of those pieces, regulation, appears inevitable, a prospect that troubled some attendees, but eventual government oversight seemed to be a prevailing conclusion of the conference.
Image credit: Nick Ayala