The concluding session of the Bitcoin Finance 2014 Conference and Expo (Bitfin) featured a wide-ranging, high-level discussion on bitcoin’s future that included prominent figures from the bitcoin world and elsewhere.
The panellists were Max Keiser, the host of The Keiser Report, which airs on Russia Today; Elizabeth Rossiello, chief executive of the Kenyan remittance company BitPesa; Rainey Reitman, activism director at the Electronic Frontier Foundation (EFF), a non-profit focused on civil liberties in the digital world; Jay Bregman, CEO of taxi-hailing app Hailo; and Greg Brockman, chief technology officer at payments services company Stripe.
Michael Terpin, managing director of social media marketing firm Social Radius, moderated the panel, titled ‘Evolution or Revolution?’. The panellists were to discuss the question of whether bitcoin would “fundamentally change money and the global financial system”.
The empire strikes back
Perhaps the most interesting spell of discussion came towards the end of the almost hour-long session. Terpin posed the provocative question of how the “empire would strike back”. That is, how would the incumbents in the current financial system potentially limit or impede the growth of decentralised currencies like bitcoin?
Reitman, of the EFF, described a future for the cryptocurrency that would see it be gradually overwhelmed by “small bits” of regulation, rather than a dramatic, sweeping move by a government or large financial institution, saying:
“What I suspect is going to happen first is that we’re going to see small bits of regulatory pieces work their way into existing laws […] What other little pieces of regulation are they going to stick in [that could create] particular limitations on bitcoin?”
Dangers of consumer demand
Reitman also warned that a growing demand for simplified, convenient bitcoin-based products and the entrepreneurs and investors supplying them could ironically sound the death knell for bitcoin. She highlighted consumer demand for familiar financial products and the guarantees that come with them, citing debit and credit cards as examples:
“Big players trying to move into this space, offering super-simple, consumer-oriented services that offer, for example, the same kind of consumer protections that people have come to expect with debit cards and credit cards […] would create a kind of environment that is centralised and is everything that is wrong with the existing financial systems.”
Reitman further underlined the seriousness of a consumer-driven threat to bitcoin, saying that the danger was imminent.
“I’m not talking 10 years from now. I’m talking two years from now,” she said.
Hailo CEO Jay Bregman painted a slightly more dramatic picture of central authorities creating a financial panic that would cause people to stop using bitcoin. He drew on his personal experience running a company that served banks during the financial crisis of 2008 as an example of the sort of widespread fear that could cause mass abandonment of the cryptocurrency.
“I was in London during the financial crisis,” he said. “I was scared and so were lots of other people […] The best thing you can ever do to try and quell any large sea-change in your market is to precipitate that kind of fear. One way is to exploit holes in the infrastructure itself. You get things like Gox.”
He also described an alternative scenario where bitcoin would be allowed to grow in popularity, only to have a calamity befall it, where some central authority would ride to the rescue:
“The alternative is […] let bitcoin get so big and then precipitate a crisis based on that. And then you say, ‘Look, this is why you need us: you need us because we’re the guys who keep finance going’. I believe that’s the thing that people should be on the lookout for.”
Keiser on bitcoin’s future
The panel also discussed more optimistic possible futures for bitcoin. When asked what he thought would be the next inflection point for bitcoin, Max Keiser said a major banking meltdown would provide an opening for the cryptocurrency; that the dollar would eventually be replaced as the global reserve currency, and that a cryptocurrency could be a candidate.
“The next battleground will be in the next major crisis in the banking sector. If you have a situation like we’ve seen with BNP being forced to pay a nine billion fine […] that’s outright extortion,” he said, referring to the fine issued to French bank BNP Paribas over alleged US sanctions violations.
Keiser summed up the panel’s consensus that the existing financial system, centred on large banks and their business models, needed fixing.
“Banks are so tied to this business model of fraud, there is no room for legal behaviour in banking,” he said.
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