“You never really know what’s going to happen with Bitcoin, it’s a surprise every day”– Jered Kenna, Tradehill
“Most of the innovation of Bitcoin must happen outside the US because the US does not tolerate innovation”– Erik Voorhees, Coinapult
“Think international- the internet is boundless”– Stefan Greiner
“Bitcoin puts financial privacy back in the hands of consumers”– Patrick Murck, Bitcoin Foundation
“Bitcoin is the Wild West”– Charlie Shrem, Bitinstant
“Its just the right mix between innovation and ‘go fuck yourself’”– Patrick Murck, Bitcoin Foundation
Today marked the very first Bitcoin London, a conference aimed at innovators, entrepreneurs and investors navigating in the Bitcoin ecosystem. For the first of its kind, this ‘invite-only’ event attracted an impressive several hundred cream of the crop delegates from the US, Canada, UK, Europe and beyond. The conference room was so full that people were standing in the back and the excitement bubbling around the networking areas was downright contagious.
Today also marked the purchase of my very first Bitcoin, an exchange I made through a Lamassu ATM on display at the show. I was able to convert my £60 cash into its equivalent in BTC, instantly.
Much of the sessions we dropped in to hear were philosophical discussions surrounding Bitcoin as a currency and several dove into the regulatory challenges that companies dealing with Bitcoin will likely have to face at some point in the future.
When it comes to regulation, seasoned ‘Bitcoiner’ Erik Voohrees of Coinapult, also known for his involvement with SatoshiDice.com, warned that there could be potential regulatory risks down the road. He said a common belief is Bitcoin as a currency is “unregulatable”, but that this is actually not true- companies using Bitcoin can be as compliant or noncompliant as they wish. They can decide how much information to hand over and how.
Another point covered was the difficulty of dealing with the United States when looking to start up a Bitcoin related business. Jered Kenna of Tradehill is based in San Francisco and confirmed that his company has a ridiculous ratio of lawyers to employees just to be sure they are playing by the rules. Kenna also added that it is difficult to raise money from investors in the US and warns that it could take years to sort out the compliance issues.
Pelle Braendgaard of Kipochi is operating within the emerging market in Kenya. Braendgaard said that its also very difficult for non-US companies to comply with US regulations so his company is actively blocking US based customers and US phone numbers. Companies have to show that they are actively avoiding, he said.
It is very important to remember that the United States is not the only market out there, a point that Voorhees and other Bitcoiners are keen to get through to the masses. For example, emerging markets such as Kenya and other parts of Africa and South America are a very good fit for a virtual currency such as Bitcoin; much of the population does not have a bank account, so why not just skip banking altogether? Also, Bitcoin are the perfect currency to facilitate international transactions for citizens of third world nations, citizens who essentially only have access to a ‘worthless’ fiat currency.
Despite all the other opportunities out there, Americans won’t want to miss out on Bitcoin and regulators won’t want to miss out on revenue, so its up to the Bitcoin industry to do the educating.
At present, the Bitcoin industry is facing the same struggles the online gambling industry faces when it comes to US regulation- it has become a state by state process. Constance Choi, General Counsel of Payward, revealed that she has had conversations with the US Treasury about the tediousness of explaining Bitcoin to all 50 states. Their response? Its up to the industry to survive these barriers of entry. “No special rules are going to be made until we’re big enough to have special rules made for”, she said. According to Choi, the Treasury is not against innovation, but in the meantime we will have to abide by their rules.
Patrick Murch of the Bitcoin Foundation advised that Bitcoin entrepreneurs be wary when entering the US market because they are actually dealing with 49 states as opposed to just one country. As a result of this state by state mess, there is a huge opportunity globally for other countries to take the lead. Murch suggested finding “Bitcoin friendly” countries such as Panama where the barrier to entry isn’t as high. “Later down the line build roads back into the US”, he said.
A challenge that any international Bitcoin company will undoubtedly face is that different governments and regulatory bodies view Bitcoin in different ways. The United States and Canada want it regulated, the European Commission does not, we haven’t even considered what impact China and the rest of Asia will have on the ecosystem and so on. “Asia just might crush what we’re doing here so quickly”, said Charlie Shrem of BitInstant. Who knows what the future will bring? Shrem said he wouldn’t be surprised to see 80% of global trading happening in Asia in the future.