Originally posted on September 29, 2015
I’ve been absent from blog writing to finish the SWIFT Project (nearly
done!), and to write a piece for American Banker. Now, I’m taking a moment
to pause for some brief thoughts on bitcoin.
I ‘own’ 1,017.69 bits, which amounts to 25 cents USD. I was
a little giddy when someone on Twitter gifted them to me as a reward for a
snarky comment about the financial crisis.
Receiving bitcoin was like getting PONG for Christmas circa
1977. For those not as nerd-minded as I, I assure you this is a compliment.
PONG, in its pixelated glory, was a pioneer of home gaming,
a forerunner of the fantastic systems we have today. Bitcoin is part of
that same technological spirit because the blockchain has the potential take
money, value, and payments out of the hands of states and financial
institutions, and bring it into our homes.
Before people start screaming “It’s not widespread and a
fad!”, or cheering “Down with the establishment!” let me explain – it’s a start not
Bitcoin is a product of a community that has always been
interested in stretching boundaries. It’s where the ideas start, but the
ideas really begin to enter our daily lives and become ‘normal’ because of
their ability to adapt to current conditions, and then become mainstream.
That’s going to take some time, and some new ideas.
To me, the blockchain is part of an evolutionary development
in money’s digital transformation. This initiative came from the private
sector, but we’ve already seen states create their own digital currency
with Special Drawing Rights (SDRs).
The technology and the ideas behind the
blockchain are diverse and adaptable – exactly the kinds of “innovative”
thinking that the financial industry adores.
Markets and consumers are excited about the possibilities,
States and regulators have been cautious. In the EU,
the European Banking Authority warned that virtual currencies are unregulated and
that lack of regulation brings regulatory risk. However, a few months ago, an
official from the EBA told me this did not mean it was against digital
currencies – “ We like diversity.”
The US has issued fines and started to regulate Bitcoin with limited success.
Meanwhile, like-minded companies strive to provide individuals and firms
who use bitcoin and the blockchain with the same confidence fiat
Lastly, the blockchain is transparent, but can offer
privacy with some effort, which is one of the least understood
aspects of the technology. This year, I was at a dinner where a
successful business guest dismissed bitcoin saying it was “just for illegal
stuff.” When I responded that it was appealing for many reasons including
the possibility of privacy, I was asked, “What’s the big deal about your
information? Are you some kind of data survivalist?”
No, I was not afraid of the government and did not envision
some apocalyptic data future. I just like the idea, which did not make me
a contemporary societal anomaly.
The message was not well received, but I was not surprised.
Later, I road home on the train, playing PONG on my smart