mobilepaymentstoday.com
Michael J. Casey, co-author of The Age of Crytocurrency, gave a keynote address at last week's ATM & Mobile Innovation Summit in Washington, D.C.
Bitcoin is dead. Well, not really. But these days, it's all about the blockchain, baby!
When news broke last week that some Wall Street heavyweights had invested a combined $30 million in chain.com, a blockchain developer platform that serves the enterprise market, it represented a "come to Jesus" moment not only for the traditional financial industry, but also for those bitcoin enthusiasts who once were the sole guardians of the virtual currency's underlying technology.
The cat is out of the bag regarding the power of the blockchain.
"Every bank now is playing with the open source software [of the blockchain]," Paul Vigna, co-author of "The Age of Cryptocurrency," told the audience at a panel discussion during last week's ATM & Mobile Innovation Summit in Washington, D.C. The summit is an annual event co-hosted by the Electronic Funds Transfer Association and Networld Media Group, publisher of Mobile Payments Today, ATM Marketplace, and Virtual Currency Today.
"All the banks are starting to see the benefits of a system of information stored on central location [and capable of] faster transactions," Vigna continued. "That is where the most heat is with bitcoin [today]. [The banks] are not afraid of it, and that is a marked changed because most people on [Wall] Street didn't want to know anything about it."
Vigna's co-author, Michael J. Casey, gave a keynote speech to kick off the summit's second day and joked that their book, published last year, is already outdated in light of the current conversation about the blockchain. The conversation about bitcoin has shifted from a discussion of bitcoin as a payment method to an examination of the underlying technology.
This is due largely to the fact that consumers in the U.S. are mostly content with their existing options for making payments — i.e., fiat currency and plastic — and don't really feel the need for an alternative such as bitcoin. But on the other hand, financial services providers struggling with longstanding issues around payment security and speed do see the blockchin as a possible solution to a persistent problem.
"The 'Eureka!' moment with bitcoin was the ability to exchange value with others without a third party," Vigna said. "Just the fact they were able to do it was a seismic shift ... you had early adopter types who wanted to have a system where the dollar faded.
"[But] once the early adopters tried to take it mainstream, that's where you ran into problems. The systems we have in place now work pretty well in the U.S., and its biggest pop lies in emerging markets."
During his keynote, Casey identified several areas where he believes the blockchain can make a difference in financial services and other areas.
He summarized the use cases often cited in reference to the blockchain (such as smart contracts), but said he believes that the technology also could improve processes in auditing, identity management, supply chain management, and wealth distribution.
"One of the reasons why some people believe the value of bitcoin will increase in the future is because now we're recognizing that there are all these alternative uses for the blockchain," Casey said. "We think of bitcoin currency as the first use case application on top of the blockchain ledger. The reason why this is possible is because the blockchain is this transparent, decentralized, always-available, real-time ledger. That's a very powerful thing."
Of course, as more traditional financial companies turn their attention to the blockchain, regulators across the globe will do the same. But right now, most governments still have their eyes on bitcoin as a transaction method.
Some panel discussions at the summit focused on regulation, including the regulation of bitcoin.
The recent approval of the New York BitLicense has had an adverse affect on the virtual currency industry, particularly in the state.
Leading up to the final set of rules, bitcoin supporters expressed concerns that the proposed New York regulations would be a financial burden on their businesses, and ultimately would force them out of New York, or cause them to stop doing business in the state.
Both have happened.
Fortune recently reported that many bitcoin startups decided to leave New York instead of applying for a BitLicense. Companies such as GoCoin and Kraken are among the companies that have pulled up stakes.
Other states are expected to follow New York's lead, thanks to efforts of the Conference of State Bank Supervisors.
Margaret Liu, senior vice president and deputy general counsel of the organization, told summit attendees that the group's emerging payments task force continues to seek comment on a regulatory framework for participating states.
"It was put out for comment in December, and we received a lot of great comments from the industry," Liu said. "We will soon come out with a final version of it.”
Liu said the framework is not a set of rules, but recommendations that states can use as a guide when setting up their own processes for virtual currency regulation. She added that the recommendations will be similar to banking and money transmitter regulations.
But a couple of panelists questioned whether applying money transmitter regulations to virtual currency is the best approach.
Kim Ford, vice president of public affairs at First Data, said that some states have hesitated to paint virtual currency with a money transmitter brush.
"From First Data's perspective and how we view the lobbying field, [this conversation] isn't just as easy as taking virtual currency and plopping it into money transmission," she said during a panel discussion on Friday. "There are certain risks and characteristics inherent to virtual currency that are different than the traditional money transmitters.
"If you're trying to meld that into one framework, it might arguably put some more requirements on traditional money transmitters that might not be appropriate."
And this could become a problem for a company such as First Data that deals with money transmitter businesses.
Sarah Martin, vice president of the Digital Currency Council, noted that a challenge with trying to put virtual currencies in one box (e.g., money transmission), is that instruments such as bitcoin and other virtual currencies are part of a larger conversation about blockchain technology.
"As much as states and other [global] governments are trying to sort out how to appropriately regulate this technology, trying to force virtual currency into money transmission regulation is a little challenging, and perhaps premature," she said.
No comments:
Post a Comment