Bitcoin mining hardware giant Bitmain announced Wednesday that it intends to invest in as many as thirty startups working to create “private central banks” powered by blockchain.
Co-founder Jihan Wu gave the first keynote address at the DC Blockchain Summit, hosted by the Chamber of Digital Commerce and Georgetown University’s Center for Financial Markets and Policy. During his remarks, Wu examined the differences between central banks that back fiat currencies and the growing plethora of cryptocurrencies worldwide.
Perhaps most notably, his presentation ended with the revelation that Bitmain wants to invest in 20 to 30 startups that would bridge those two worlds, arguing that private central banks – distinct from institutions like the Federal Reserve, which is technically private but is linked to the U.S. government – “are better at creating more convenient user experiences of consumers.”
“We at Bitmain are very interested in private central bank startups that are going to use blockchain technology to issue private currencies and set it as a service, in a legal way. We would like to invest in 20 to 30 startups whose efforts are focused on this unique emerging economy.”
He also argued that such ventures are potentially lucrative, highlighting the income earned by the Fed and noting that “we all know that a central bank is a very profitable business.”
The statements reveal the widening ambitions of the company, which is also looking into applications in the area of artificial intelligence, as previously reported by Quartz. The central bank-focused push also comes as Bitmain reportedly looks to grow its mining footprint, with an eye to expanding in Canada.
On markets and regulation
The startup investment announcement came at the tail end of Wu’s speech, which otherwise focused on a number of topics, from economist Friedrich Hayek to token-powered incentivization.
Notably, he challenged the idea that the cryptocurrency market would consolidate around a few significant coins, pointing to the fast growth experienced by some networks.
“The fact is that bitcoin’s dominance has been declining and we see that lots of other cryptocurrencies like ether and dash grow very fast, and you just cannot explain if you think the theory is right that the market will consolidate,” he remarked.
Indeed, Wu argued that there is no one “perfect” cryptocurrency, and as a result, there’s demand for numerous options within the market.
“There’s no perfect cryptocurrencies on the market, so the market will require more cryptocurrencies,” he told attendees.
Wu also touched on the topic of regulation and tokens in particular – a notable topic given the recent chatter around rumored investigations by the U.S. Securities and Exchange Commission, which on Wednesday stated that trading platforms offering exchange services for ICO-derived tokens would need to register with the government if the tokens in questions are deemed to be securities.
The Bitmain co-founder said that he thinks many of the tokens on the market today will fall under that definition.
“Most tokens will very likely fall into the definition of a security and will be subject to the regulation of a security,” he said, going on to argue:
“But I believe regulators need to prepare a good answer on how to deal with such business innovations.”
Photo by Annaliese Milano for CoinDesk