Irish News

Tuesday 2 September 2014

Key players debate Bitcoin future

Published 29/06/2014 | 09:42

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The origin of the Bitcoin is shrouded in mystery

The much-maligned digital cash Bitcoin is on course to revolutionise global trading in the same way email, MP3s and digital photography flipped lifestyles and industries on their head, supporters have claimed.

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Key players in the world of online payments will be in Dublin this week to debate why and when people will start moving to the divisive virtual payment system.

Much of the commentary and criticism of the radical currency has focused on its volatility, and its massively upward curve in value - it went from 14 US dollars (10 euro) in January 2013 to more than 1,100 dollars (805 euro) late in the year before collapsing to 400 dollars (293 euro) in April this year. It now trades at around 600 dollars (439 euro).

A meeting of minds at the RDS conference centre on Thursday will examine how the focus can be moved from whether bitcoin is a viable currency to how it will be used to pay for goods and services a decade from now.

Some entrepreneurs backing the new way of doing business say ultimately it will be as recognisable as a dollar bill's green seal.

Others are promoting the moral imperative of the currency claiming that it can open the door to economic participation for six billion consumers in developing countries.

Nicolas Cary, creator of Blockchain.info, an online wallet used to store bitcoin and database of all transactions, said 10 years from now bitcoin's success will be obvious.

"The digital world is part of our DNA now, it's part of how we share our experiences, how we consume entertainment, and how we stay in touch with loved ones," he said.

"It's impacting how we live our lives including how we pay for things.

"Let's not kid ourselves. Why can't money be digital? The financial future of the world is at stake so it's best not to have our heads stuck in the sand."

Among those attending the BITFIN conference are Jeremy Allaire, founder of Circle, a Boston and Dublin-based company which has developed tools to simplify the use of digital currency for consumers. It has raised about 26m dollars (19m euro) funding.

It is also the first time a policymaker from a central bank will address a conference on bitcoin with Gareth Murphy, director of markets supervision at the Central Bank of Ireland, a guest speaker.

Others include the head of Irish payment giant Realex, Colm Lyon, and CurrencyFair chief executive Brett Meyers and Electronic Frontier Foundation activism director Rainey Reitman.

Organisers say they are hosting regulators, institutions, civil rights activists and bitcoin pioneers.

Some people from the world of global finance are expected to attend privately.

The origin of Bitcoin is shrouded in mystery. The creator, using the pseudonym Satoshi Nakamoto, launched the protocol in 2009, and ceased all communication in 2011.

The concept was to provide open source software to create a trusted peer-to-peer currency not under the authority of a country, government or central bank.

Fergal Murray, organiser of the conference and a technology entrepreneur, said only last year bitcoin was being viewed as anything from a ponzi scheme to a fringe experiment for geeks.

"A year later it is being recognised by a rapidly growing people as a completely transformative technology, but it is difficult to use, explain and understand," he said.

Mr Murray said companies like Circle, Blockchain.info, Bitpay and Bitnet are rapidly building the tools and interfaces so regular people can use bitcoin safely and cash it in for familiar currencies without risk.

"The Googles and Facebooks of bitcoin have not yet been conceived," he said.

"For now - people are focused on bitcoin as a payments network and currency. The regulatory conversation is now getting started in earnest.

"Banks, financial institutions, and payment processors will seek to defend their current positions and secure new competitive advantage with blockchain technologies, but the future looks more and more likely to be open and free."

Mr Murray passionately promotes the idea that developing countries of Africa, Southeast Asia and Latin America, where trade is at the whim of governments and central banks, digital currency might allow consumers to bypass traditional banks and costly surcharges on wire transfers from relatives abroad.

"This might not be a big deal to Europeans or Americans whose employers direct deposit paycheques to bank accounts which link to personal debit cards that can be used just about anywhere," he said.

"But to the Kenyan who relies on mobile money to pay for groceries, it's no small deal; bitcoin has a moral imperative to succeed."

Bitcoin has been compared it to the internet in 1993 when it was usable only by a select group of techies. It took the development of easy-to-use web browsers to make the internet accessible to everyone.

Opponents, however, remain fearful that a digital currency that has no regulator or central bank is ripe for abuse by hackers and money launderers.

Defunct Tokyo-based bitcoin exchange Mt Gox, is an example as it went bust after it lost about 850,000 bitcoins while the Silk Road, an internet black-market bazaar that accepted bitcoin has been shut down and operators' profits seized.

Bitcoin's status is as divisive at government level. The US classes It as property not currency and therefore taxable. China and Russia have remained hostile to the currency.

Elsewhere, Canada has recognised it as money and will regulate it while the Isle of Man is introducing controls on its use effectively recognising it.

Blockchain's Mr Cary added: "There is a misconception that Bitcoin and governments are at odds with each other. This is incorrect.

"Bitcoin is an invitation to participate in a better world and take steps into the financial future." He added: "Barnes and Noble, Tower Records, and Blockbuster laughed at the digitisation of their products and services - but now these business are bankrupt. The internet hasn't been kind to industries that can't embrace digital efficiencies - and finance is next if they cannot acknowledge the changing tides".

The BITFIN conference runs on Thursday and Friday this week at the RDS.

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