BitCoin London: BTC Wins Friends But Alienates Regulators
Experts say it is much easier to run a BitCoin business in Europe than the US
During an event that would seem unbelievable just a year ago, BitCoin (BTC) enthusiasts congregated in the financial heart of London to discuss the challenges facing the virtual currency, chief among which was government regulation.
The inaugural Bitcoin London conference took place at Level39, Europe’s largest financial technologies accelerator space. During the event, several experts agreed that the recent attention of the US Commodity Futures Trading Commission has done the BTC industry more harm than good. However, it was not too late to shape the debate around BitCoin.
The conference also welcomed the first demonstration of a BitCoin ATM in London.
A new paradigm for finance
BitCoin is no longer cool. The virtual currency has ceased to be a part of digital subculture, and officially entered the mainstream. The audience at the BitCoin London conference still included a few geeks in lumberjack shirts, but also plenty of sharply dressed men and women who represented established financial institutions.
The event kicked off with Tuur Demeester, editor of MacroTrends, describing the existing global financial system as a broken mechanism. “We are seeing structural insolvency in both banks and governments. We are seeing a monumental debt bubble. We are seeing shady broker firms, manipulated interest rates, rampant money printing around the world, and “solutions” to the problems that aren’t solutions at all.”
Demeester believes that none of these problems would exist if we all used BitCoin – a completely digital currency based on an open-source, peer-to-peer Internet protocol introduced in 2009. He described BitCoin as “ideal money” – fair, secure, durable, “extremely transportable” and “amazingly flexible”. Most importantly, unlike fiat currencies, the supply of BTC is steady and predictable.
According to Demeester, adoption of BitCoin will continue at a steady pace, and he expects the price of BTC to grow throughout 2014.
Stefan Thomas, senior developer at the open payment network Ripple, criticised the way BitCoin was portrayed in the media, but admitted that virtual currency still had issues with fraud, usability and user expectations. Thomas had recently lost a whopping 7000 BTC (worth approximately $700,000 today) due to a botched backup – something that would never happen with traditional currencies.
The developer said growth of the BitCoin ecosystem had to be accompanied by a focused education campaign. He also announced that on Tuesday, BTC processing capability was finally added to the Ripple platform.
Eric Vorhees, CEO of Panama-based Coinapult and one of the BitCoin pioneers, used his time on stage to launch a scathing attack on the US regulators. “I grew up learning that the United States was the capital of nations, promoting free trade and responsible banking. Later, coming out of business school, I’ve learned that the US had some of the most arcane, ridiculous financial regulations on the face of the earth, and now being a US citizen or company was no longer an asset, but a liability.”
“Regulation [around BitCoin] is not getting better, it’s getting worse,” said Vorhees. This view was shared by Jered Kenna from the US-based virtual currency exchange TradeHill, which now employs more attorneys than developers.
Patrick Murk, general counsel at the BitCoin Foundation, said that recent attention of US regulators had made BTC more “legitimate”, and called it a “watershed moment” for the industry. However, additional regulation would also make running a BTC business so much harder.
As a response, in July a number of BTC companies are planning to launch a self-regulated standards body separate from the BitCoin Foundation. It is hoped that such an organisation will help foster dialogue between US politicians and the BitCoin community.
Meanwhile in Europe, the regulators still don’t classify BTC as ‘money’, or even ‘e-money’, clearly adopting a ‘wait and see’ approach and making it easier to develop innovative businesses based on virtual currency. “Because these are new regulatory issues, we have the opportunity to shape the debate to decide which way the industry should go, and what kind of rules should apply to a technology like this,” said Constance Choi, general counsel at trading platform Payward.
During the conference, participants had the opportunity to use a BitCoin ATM (pictured left), which appeared in London for the very first time. This production-ready box accepts notes, and upon receipt converts the balance into BitCoin, which is then displayed as a QR code. A mobile phone app can read the code, and transfer the balance into a BitCoin wallet.
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