BitCon:2013 The Biggest Problem with Bitcoin is DollarsMay 20th, 2013
This weekend marked the first major US Bitcoin Summit at the San Jose Convention Center in California. There’s a full schedule of panels, presenters, and speakers discussing the future of the world’s most popular peer-to-peer digital currency. I’m attending with Bitcoin Not Bombs supporting representatives from Fr33 Aid, Anti War and the Free State Project who are hosting a panel discussion on the advantages of Bitcoin to non-profit organizations.
There’s a lot of buzz around the conference about who was the first Bitcoin project to do what. So, I’d like to announce that Bitcoin Not Bombs is the world’s first official Bitcoin firsts adjudicating committee. Think of it as a kind of a Satoshi Book of World Records.
We also recently saw the State’s first so-called attack on Bitcoin.
Teresa Warmke from Fr33 Aid, Angela Keaton from Anti War and Carla Gericke from the Free State Project discussed how Bitcoin could be used for banking and fundraising by non-profits and how non-profits help build the Bitcoin economy. The panel was moderated by Dr. Stephanie Murphy from the Porc Therapy show. I attended with Drew Philips from Bitcoin Not Bombs hawking swag and propaganda to raise money for them.
I’m worked at this conference, so most of the impression I got came from people that came to our table, or eaves dropping as I walked around. So, I got more of a buckshot of Bitcoin zeitgeist than I would have gotten actually attending the program. What I’ve deduced is that the biggest problem with Bitcoin is dollars. Here’s what I mean.
As you may know it’s pretty difficult to buy Bitcoin with Paypal. It seems like it should be easy. Both are payment systems designed to make transactions fast and easy online. Don’t tell anyone, but we met a guy from Paypal who suggested there were rumblings internally that they might have to one day consider the possibility the adopting Bitcoin at Paypal allegedly. Here’s the problem. It’s not difficult to buy Bitcoin with Paypal because Paypal doesn’t accept Bitcoin. It’s difficult because smart Bitcoiners don’t accept Paypal. Sending Bitcoin is virtually instant, and irreversible. Sending dollars through Paypal can be disputed, and reversed. If people trade Bitcoin for Paypal dollars simultaneously there’s a risk that the Paypal user will dispute the transaction and walk away with both. The problem is with Paypal, not with Bitcoin.
Also, there’s a mad scramble for who can rightfully call themselves the World’s First Bitcoin ATM, and there’s some semantic word play going on. Is it a “machine” or an “automated exchange” or a “vending machine” or a “kiosk”? Lamassu has a beautiful working model of a machine that takes dollars and dispenses Bitcoin. Just hold a QR code up to the machine’s camera and off it goes. Super easy. Super fun. Super fast. They moved hundreds of Bitcoins at this conference. The catch is it doesn’t dispense dollars, so it’s a one way converter. We’ve been calling it “The paper shredder.” RoboCoin, Bitcoin ATM and any number of others are developing the idea, but they’re not ready for prime time because they want their machine to also accept Bitcoin and dispense dollars. That’s not technologically difficult. It’s legally difficult. The regulations governing such a project are legion and byzantine, and everyone is expecting more. The problem is getting dollars, not getting Bitcoin.
And there’s the so-called first Fed attack on Bitcoin. It’s a bit of a sensational headline for what I consider an essentially symbolic gesture. Homeland Security froze the Dwolla account of Mt. Gox, the largest Bitcoin exchange. So, the Bitcoin network itself was not even touched. DHS issued a seizure warrant for one account of one exchange. Mt. Gox users used Dwolla to cash out Bitcoin for dollars. The thing is,users still have all their Bitcoin. They can still spend them as they wish. They just can’t trade them for dollars through that channel. In essence the DHS prevented people from getting out of Bitcoin. For people happy to continue using Bitcoin it’s business as usual. No frozen accounts. No lost funds. No attack whatsoever. The Fed didn’t attack Bitcoin. It attacked dollars in Dwolla.
Every time there’s a potential hurdle on the road to Bitcoin adoption, it’s not Bitcoin that’s the problem. It’s the arbitrary and cumbersome regulations of the legacy banking system, and the stranglehold that State has on the dollar. Really the problem is that Bitcoin is so dramatically superior to the dollar that the two systems have trouble communicating.