The Baltic Honey Badger Conference of 2018, held this year in Riga, Latvia, wrapped up today with a panel featuring Adam Back, the CEO of Blockstream, Giacomo Zucco, CEO at BHB Network; Tone Vays, a former Wall Street risk analyst and Bitcoin advocate; and Eric Lombrozo, CEO at Ciphrex Corp.
The panel was moderated by Matthew Mežinskis, host of the CryptoVoices podcast, who began by asserting that central banks, with the assistance of government, have established a monopoly over money supplies.
“What is Bitcoin going to do about the monopoly in money?” he asked.
Giacomo Zucco, whose company is helping enterprises incorporate Bitcoin, said that Bitcoin is now functioning mainly as store of value by permitting people to save in conditions where government-issued money gradually devalues.
According to Zucco, Bitcoin will proliferate worldwide mainly for this property, though it is also used as a medium of exchange, “in markets with no alternative.”
Zucco indirectly addressed the debate current now between Bitcoin Cash proponents like Roger Ver and (standard) Bitcoin proponents.
Ver has pursued merchant adoption for years, first for (standard) Bitcoin and then for Bitcoin Cash, a fork of the Bitcoin protocol he and partners launched in 2017, which they believe is engineered to better serve as a payment system than (standard) Bitcoin.
Ver firmly believes a digital currency without pervasive retail adoption will fail.
Critics of Bitcoin Cash say that Ver’s scaling solution – the creation of bigger underlying blocks of data – is an inadequate and short term scaling solution at best.
Supporters of the original Bitcoin protocol believe that, until (standard) Bitcoin scales through secondary layers rather than an increase of block size, it is functioning fine as deflationary “store of value,” akin to gold that processes relatively few transactions.
To Zucco, while some may now be interested in using Bitcoin to buy, “a cup of coffee … because it’s fun … or for marketing purposes … the real people who have to use Bitcoin will be the one’s that don’t have an alternative.”
Zucco, who orients enterprises with Bitcoin, also suggested the protocol and autonomous payment system could allow very small businesses to start up more easily by freeing themselves from red tape they cannot afford to navigate, at least initially:
“Thinking about black markets of course but also about the giant grey markets … not, per se … forbidden, but they require a lot of licensing, whitelisting, KYC, permissions … from selling lemonade to selling songs online … basically every kind of e-commerce, I see that as a giant pool of potential grey market … (that) will probably emerge thanks to Bitcoin. I think right now, a great part of the world population could trade some kind of a good or service but they don’t because the transaction costs in order to set up a company, a bank account, some kind of financial identity are so high that they rule out of the market a great part of the possible business cases.”
In Bitcoin’s early days, the system got its legs mainly thanks to the interest of outliers and who sought a financial alternative or who simply wanted to experiment.
Dark Net marketeers were among the first with clear incentives to engage with Bitcoin, which circulates online and outside of the banking system, but Zucco emphasized Bitcoin’s “grey market” potential:
“So it’s not just about the black market – black market is not just about illegal recreative substances and weapons, black market / grey market is also about, I don’t know, giving you a ride with my car without having Uber-centric credit card agreement which is very easy to censor.”
Tone Vays, however, expressed concern about how a lack of integrity in “crypto” – the subcultures creating myriad cryptocurrency alternatives to Bitcoin through initial coin offering (ICOs) – could be undermining the Bitcoin utopian project itself by siphoning money to weak and shortsighted projects for a quick buck:
“It’s really hard to say … where Bitcoin will be in five years … because it’s not only fighting the centralized fiat money system … but also fighting every centralized alt-coin … (and) it seems like everyone else seems to be doubling down on those altcoins.”
Vays also expressed concern about the much-lauded mainstreaming of Bitcoin, in which people may allow finance institutions, and even governments, to control custody of their Bitcoins:
“What happens when government entities, central banks … control more than 51% of the Bitcoin?… (Then) we are in a 1934 situation, where the government can confiscate the majority of Bitcoin and now they own the underlying asset … Something to think about 20 or 30 years down the line if Bitcoin continues its success.”
Eric Lombrozo, CEO at Ciphrex Corp, a software company and provider of a multi-signature (high-security) Bitcoin…