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Cryptocurrencies    

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Cryptocurrencies    

Exploring  a  revolutionary  technology  

                  Authors   Innopay   Jacob  Boersma   Gijs  Burgers  

Jacqueline  van  Huijstee   Maarten  Rood  

 

Release  

June  2014  

Copyright  ©  2014  Innopay   All  rights  reserved  

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Contents  

1   MANAGEMENT  SUMMARY  ...  4  

2   INTRODUCTION  ...  8  

Distributed  consensus  technology  as  a  new  trust  enabler  ...  8  

Suggestions  for  banks,  regulators  and  entrepreneurs  ...  8  

Market  is  at  risk  of  deadlock  ...  9  

Reading  guide  ...  9  

3   THE  EXPERTS’  PERSPECTIVE  ...  10  

3.1   Dave  Birch:  Technology  above  currency  ...  10  

3.2   Tuur  Demeester:  Cryptocurrencies  will  cause  a  paradigm  shift  on  the  financial  market  ...  12  

3.3   Simon  Lelieveldt:  The  colouration  of  coins  ...  15  

4   THE  ENTREPRENEURS’  PERSPECTIVE  ...  17  

4.1   Jouke  Hofman  &  Niels  van  Groningen:  Start  your  car  with  a  private  key  ...  17  

4.2   Tony  Gallippi:  The  continuance  of  the  evolution  of  digital  money  ...  20  

4.3   Pierre  Noizat:  How  Bitcoin  will  be  a  major  driver  for  developing  a  macro  economic  system  ...  23  

4.4   Bobby  Lee:  Reinventing  doing  business  in  the  financial  world  ...  26  

5   THE  GOVERNANCE  PERSPECTIVE  ...  30  

5.1   Marc  Hemmerling:  The  complementarity  of  payment  systems  ...  30  

5.2   Kim  Gunnink:  Will  cryptocurrencies  live  up  to  their  expectations?  ...  32  

5.3   David  Aylor:  Understanding  leads  to  acceptance  ...  35  

6   CONCLUSIONS  ...  37  

6.1   Cryptocurrencies  are  here  to  stay;  we  are  only  just  seeing  the  beginning  ...  37  

6.2   The  technology  will  be  developed  further  ...  38  

6.3   Any  transaction  service  can  benefit  from  cryptocurrency  principles  ...  38  

6.4   Banks  will  get  involved  first  hand,  and  will  integrate  cryptocurrency  principals  into  their  own   infrastructure  ...  39  

6.5   The  right  regulatory  framework  needs  to  be  put  together  ...  40  

6.6   Improved  governance  can  enhance  trust  ...  40  

6.7   Promises  and  threats  ...  40  

6.8   There  is  a  need  to  educate  in  order  to  promote  smart  use  ...  41  

7   REFLECTION  ...  42  

7.1   The  technology  is  here  to  stay,  but  current  services  might  go  ...  42  

7.2   For  the  industry  to  go  forward,  dialogue  between  players  is  essential  ...  42  

7.3   Challenges  for  cryptocurrencies  ...  44  

8   ABOUT  INNOPAY  ...  46  

9   SOURCES  AND  REFERENCES  ...  47  

10   GLOSSARY  ...  48    

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1

Management  summary

 

Cryptocurrencies  such  as  Bitcoin  are  a  hot  topic  with  both  enthusiasts  and  detractors.  To  get   an   insight   into   what   we   can   expect   from   cryptocurrency   in   the   near   future,   Innopay   interviewed   11   globally   leading   figures   from   the   cryptocurrency   and   payments   field.   We   interviewed   experts,   entrepreneurs   and   representatives   of   a   variety   of   governance   institutions  to  obtain  a  broad  view  of  developments.  

Distributed  consensus  technology  as  a  new  trust  enabler  

The  general  consensus  is  that  cryptocurrencies  will  not  be  going  away  any  time  soon.  What   makes   this   a   disruptive   innovation   however   is   less   about   the   currency   aspect   and   more   about  the  cryptographic  block  chain  technology.  This  allows  for  distributed  consensus  in  a   decentralised   system,   paving   the   way   for   applications   in   securities,   cadasters,   loyalty   and   notary  services  but  also  in  fields  such  as  e-­‐identity  and  e-­‐invoicing.  

By  leveraging  its  unique  advantages,  cryptocurrency  can  become  an  innovation  on  par  with   the  Internet  itself,  and  can  enable  a  myriad  of  services  that  will  revolutionize  the  way  we  do   business  online.  

The  history  of  digital  currencies  up  until  now:  decentralised  trust  has  long  been  a  major  challenge  

Adoption  remains  slow,  how  will  we  bridge  the  gap?  

Mainstream   adoption   of   Bitcoin   is   speeding   up   but   still   has   a   long   way   to   go.   Although   it   offers   unique   advantages   for   cross-­‐border   transactions   and   micro   payments,   it   is   unclear   how  Bitcoin  and  other  current  cryptocurrencies  can  bridge  the  gap  from  early  adopters  to   the  majority  of  merchants.  Some  experts  and  governance  representatives  strongly  question   the  viability  of  Bitcoin  in  the  long  term.  Current  implementations  could  also  contain  hidden   flaws  that  still  need  to  be  ironed  out  and  that  could  lead  to  a  loss  of  trust  by  the  general   public.   Although   that   would   be   the   end   for   specific   cryptocoins,   the   ideas   behind   the   currencies  will  continue  to  be  developed  and  become  part  of  the  toolkit  used  to  build  future   transaction  networks.  

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Banks  will  get  involved  and  integrate  cryptocurrency  principals  

Banks  do  not  see  cryptocurrencies  as  a  threat  to  their  position  in  the  financial  market;  the   market  share  of  Bitcoin  and  other  coins  is  much  too  small  for  that.  The  core  role  of  banks  as   trust  providers  remains  important  and  can  also  allow  banks  to  offer  their  own  services  in  the   cryptocurrency  space.  This  allows  them  to  become  a  bridge  between  old  and  new  financial   systems  and  between  entrepreneurs  and  regulators.  

However   it   is   also   recommended   that   banks   study   the   underlying   mechanisms   of   cryptocurrencies  and  start  adopting  the  benefits.  Banks  can  use  this  opportunity  to  innovate   their  transaction  infrastructure,  or  run  the  risk  of  lagging  behind.  There  is  also  potential  for   non-­‐bank  players  to  reap  the  benefits  if  banks  move  too  slowly.  

Market  at  risk  of  deadlock  

While  the  collective  understanding  of  cryptocurrency  is  still  developing,  the  growth  of  the   market  is  being  threatened:  regulators  are  waiting  to  see  how  the  market  develops  before   issuing  regulations,  banks  are  waiting  for  the  regulators  to  come  up  with  clear  guidelines  and   entrepreneurs  are  waiting  for  acceptance  by  the  banks  and  the  regulators.  This  early  market   stage  calls  for  pioneers  within  each  stakeholder  group,  who  dare  to  move  forward  and  show   confidence  that  challenges  can  be  solved  as  they  appear.  

The  right  regulatory  framework  needs  to  be  put  together  

To  get  out  of  this  deadlock  and  ensure  adoption  in  the  long  run,  regulations  are  needed  to   legitimize   the   Bitcoin   and   cryptocurrency   industry.   In   the   short   term   however,   businesses   need  to  accept  that  they  have  to  grow  first  and  get  regulated  later.  Although  many  fear  that   regulations   could   become   too   strict,   experts   agree   that   you   cannot   ban   the   technology,   although  strict  regulations  will  certainly  further  slow  down  this  fledgling  industry.  Regulation   can   also   help   by   regulate   the   use   of   the   technology,   protecting   consumers   and   pulling   cryptocurrency  out  of  the  shady  “black  market”  world  with  which  it  is  often  associated.  

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Improved  governance  and  education  can  enhance  trust  

We  see  the  rise  of  more  centralised  governance  of  cryptocurrencies  in  the  coming  years,  for   example  in  the  shape  of  self-­‐regulating  industry  bodies  such  as  DATA1.  This  will  stimulate  the   required  dialogue  with  regulators  and  improve  trust  and  thus  adoption  by  the  general  public,   as  well  as  the  dialogue  between  the  players  themselves,  in  order  to  share  best  practices  and   move  forward  together.  

As   well   as   governance,   education   is   needed   on   both   the   good   and   bad   sides   of   cryptocurrencies.   Entrepreneurs   have   a   role   to   share   their   experience   and   improve   understanding   with   both   potential   users   and   regulators,   leading   to   broader   acceptance.   There  is  a  need  for  a  clear  story  that  explains  to  the  layman  how  the  technology  can  work  for   him.   This   is   an   essential   requirement   to   be   able   to   bridge   the   gap   into   mainstream   acceptance.  

The  future  of  cryptocurrencies  

If  the  industry  in  its  current  state  can  manage  the  challenges  with  which  it  is  faced  and   effectively  organise  itself,  other  sectors  will  be  able  to  start  innovating  using  cryptocurrency   technology  as  well.  Any  transaction  market  or  context  where  ownership  needs  to  be  

undisputed  can  benefit.    We  need  to  bring  the  current  industry  to  maturity  as  soon  as   possible  so  that  we  can  copy  the  benefits  to  other  markets  in  need  of  innovative  exchange   mechanisms.  There  are  interesting  times  ahead,  exploring  the  revolutionary  technology  of  

cryptocurrencies.    

                                                                                                               

1     DATA,  the  Digital  Asset  Transfer  Authority  was  established  in  2013  with  the  aim  to  become  a  

regulatory  organization  for  companies  at  the  forefront  of  emerging  payments,  virtual  currency,  and   other  financial  technology  innovations  (http://info.datauthority.org)  

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  The  Bitcoin  ecosystem  and  its  players  

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2

In

troduction

 

Cryptocurrencies  are  a  hot  topic  for  friend  and  foe.  Ever  since  this  phenomenon  came  to  the   fore  through  the  rise  of  Bitcoin,  all  stakeholders  in  the  financial  industry  (banks,  regulators,   merchants,  users  and  entrepreneurs)  have  been  struggling  to  get  to  grips  with  it.  Is  it  money,   an  asset  or  technology?  Or  is  it  something  we  haven’t  seen  before,  a  category  unto  itself,  like   the  Internet  back  in  the  early  nineties?  As  with  the  early  Internet,  opinions  are  divided  as  to   whether  it  is  here  to  stay.  

The  team  at  Innopay  has  been  closely  following  the  development  of  cryptocurrencies  since   2010,   recognizing   the   disruptive   potential   of   this   technology.   Bitcoin   has   clearly   gained   traction   in   the   meanwhile   and   other   ‘altcoins’   appeared.   We   became   used   to   new   words   such  as  ‘mining’,  ‘cold  storage’  and  ‘block  chain’.    

Distributed  consensus  technology  as  a  new  trust  enabler  

Certainly  cryptocurrencies  are  not  going  away  any  time  soon.  However,  in  a  few  years  we   might   not   call   them   ‘currency’   anymore   because   they   are   not   fulfilling   the   traditional   definition  of  a  currency.  What  makes  Bitcoin  and  other  cryptocurrencies  such  a  disruptive   innovation   is   mainly   the   cryptography   based   block   chain   technology,   which   allows   for   ‘distributed  consensus’  by  an  unlimited  group  on  an  untrusted  network.  Decentralized  trust   is  a  mathematical  problem  that  has  been  on  the  agenda  of  academics  for  decades2.  

Thanks   to   the   decentralized   consensus   mechanism   there   is   not   one   single   individual,   company  or  public  institution  that  claims  the  truth  on  ownership  of  assets,  but  instead  the   ‘crowd’  holds  a  public  ledger  that  is  continuously  confirming  and  securing  who  owns  what.   Seen  in  that  light,  Bitcoin  is  ‘just  an  implementation’  of  this  principle  applied  to  a  medium  of   exchange   that   can   be   used   as   a   store   of   value   and   currency   and   therefore   a   trusted   instrument   in   commerce.   Other   potential   applications   of   block   chain   technology   can   be   found   in   contexts   with   centralized   asset   registries,   such   as   securities,   cadasters,   titles   and   deeds.  Transaction  markets  like  the  ones  for  digital  identity  and  e-­‐invoices  could  also  benefit   from   aspects   of   the   technology.   Initiatives   to   develop   these   types   of   applications   are   underway.  

Suggestions  for  banks,  regulators  and  entrepreneurs  

This  report  gives  a  concise  overview  of  key  opinions  within  the  industry  and  a  clear  message   to  regulators,  banks  and  entrepreneurs.  Those  are  the  parties  that  are  shaping  the  industry,   based  on  the  demand  of  their  various  customers.  In  creating  this  report  we  interviewed  11   industry   experts   coming   from   the   worlds   of   payments,   regulation   and   entrepreneurship.   Their  views  and  recommendations  form  the  heart  of  this  document.  

                                                                                                               

2     Lamport,  L.;  Shostak,  R.;  Pease,  M.  (1982)  "The  Byzantine  Generals  Problem".  ACM  Transactions  on  

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Market  is  at  risk  of  deadlock  

The   collective   understanding   of   the   cryptocurrency   phenomenon   is   still   developing,   which   threatens  to  stall  market  development.  Many  parties  are  waiting  for  each  other  to  make  the   next  move:  some  entrepreneurs  are  waiting  for  ‘regulation’  and  acceptance  by  banks,  banks   are  also  waiting  for  ‘regulation’  and  regulators  are  waiting  for  ‘the  market’.  This  early  market   stage   clearly   calls   for   pioneers   within   each   stakeholder   group,   who   dare   to   boldly   move   forward  into  this  uncharted  territory  and  who  have  confidence  that  problems  and  challenges   can  be  solved  as  they  appear.  

Reading  guide  

This  report  consists  of  three  parts.  The  first  part  consists  of  the  aforementioned  interviews   from   the   different   stakeholder   groups.   In   the   first   three   interviews   payment   and   financial   services  experts  provide  a  broad  perspective  on  society,  economy  and  payments  in  general,   and  the  function  cryptocurrency  might  fulfil.  This  is  followed  by  the  second  set  of  interviews   with   entrepreneurs   currently   leading   cryptocurrency   companies.   The   entrepreneurs   bring   the   hands-­‐on   experience   with   doing   business   in   the   world   of   Bitcoin.   After   the   entrepreneurs,  in  the  third  set  of  the  interviews  professionals  involved  in  government  and   governance  share  their  opinions  and  elaborate  on  what  function  regulation  fulfils  or  will  fulfil   for  cryptocurrencies.  

The   interview   section   is   followed   by   the   second   part   of   this   report:   a   summation   of   the   conclusions  that  can  be  drawn  out  of  these  various  insights.  In  the  third  and  final  part  of  the   report,   we   reflect   on   the   cryptocurrency   and   payments   landscape   and   recommend   ways   forward  for  the  three  angles:  regulation,  payment  providers  and  entrepreneurs.    

The  appendixes  at  the  end  of  the  report  provide  a  glossary  explaining  the  terminology  used   throughout   the   cryptocurrency   sphere   as   well   as   a   reference   section   with   links   to   further   reading  material.    

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3

The  e

xperts

’  perspective  

3.1

Dave  Birch:  Technology  above  currency  

What  impact  will  cryptocurrency  have  on  the  world  in  the  long-­‐term?  

To   answer   this   question,   I   think   it   is   important   to   pull   apart   what   cryptocurrency   actually   means.  I  see  cryptocurrency  as:  

• A  new  currency;  

• The  mechanism  for  wholly  virtual  currencies  to  exist;   • A  generalised  mechanism  to  transmit  value.  

Each  of  these  definitions  has  a  slightly  different  impact.  In  the  long  run  cryptocurrencies  will   be  important  as  currencies  but  not  in  the  Bitcoin  sense.  I  am  more  interested  in  the  value-­‐ based   currencies,   because   cryptocurrency   must   represent   a   real   value   to   have   a   future.   Currency   and   its   value   must   make   sense   to   the   community   in   which   it   functions.   Pure   cryptocurrencies  (like  Bitcoin  and  Litecoin)  that  do  not  represent  an  underlying  value  will  not   have  a  future  in  the  long  run.    

The  use  of  cryptocurrencies  to  carry  existing  currencies  (e-­‐cash)  around  can  have  a  future,   however  this  will  be  less  important  and  won’t  have  a  big  impact.  

The  concept  of  a  public  ledger,  using  cryptocurrencies  for  things  other  than  currencies,  has  a   long-­‐term   potential   use.   If   you   can   use   block   chain  

technology  to  transfer  digital  assets,  then  the  demand   to  move  money  around  will  decrease3.  In  other  words,   we   might   look   at   equity   in   a   different   way   if   we   are   able  to  transfer  ownership  efficiently  online.  We  could   also   see   start-­‐ups   fund   themselves   using   open   share   registers.  

Some  of  these  developments  or  impacts  will  create  new  institutions.  We  need  to  wait  and   see  what  institutions  will  arise  from  developments  this  new  technology  brings.  However,  I   expect  cryptocurrencies  to  remain  a  novelty  for  the  coming  couple  of  years.  But  in  five  years,   it  is  possible  that  we  start  to  see  the  first  real  applications  moving  towards  the  mainstream.    

                                                                                                               

3        The  Bitcoin.org  website  provides  a  clear  explanation  of  how  block  chains  work:  https://bitcoin.org/en/how-­‐

it-­‐works      

Dave   Birch   is   a   director   of   the   UK   and   US   based   consultancy   firm   Consult   Hyperion.   Dave   is   considered   a   specialist   in   electronic   transactions   and   advises   governments   and   large   companies   on   digital   identity  and  digital  money.  

Cryptocurrencies  that  do  not   represent  an  underlying  value   do  not  have  a  future  in  the  

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What  risks  and  challenges  do  you  see  ahead  for  cryptocurrency?    

The  issues  raised  about  cryptocurrencies,  primarily  the  issue  that  cryptocurrencies  are  used   on   the   black   market,   are   marginal   and   form   a   distraction   from  

any   real   dangers   or   risks.   The   same   goes   for   the   so-­‐called   tax   issue:   Governments   are   concerned   that   they   do   not   have   the   ability  to  tax  Bitcoin  and  miss  out  on  tax  revenue.  Since  realizing  

a  dynamic  and  efficient  economy  should  be  more  important  to  governments,  the  tax  issue   should  not  be  considered  a  major  concern.    

There   will   be   development   changes   and   growing   pains   like   we   see   them   at   this   moment.   Even  if  Bitcoin  as  we  know  never  takes  off,  the  technology  is  going  somewhere  and  is  here  to   stay.  

How  do  you  think  traditional  economic  institutions  like  banks  will  react?  

I’m  sure  banks  will  use  Bitcoin  or  any  other  cryptocurrency  if  it  comes  to  that,  but  at  this   moment  they  don’t  really  care  about  it.  All  this  might  change  in  the  long  term  of  course.  I   think   it   is   most   likely   that   banks   will   not   use   Bitcoin   as   a   currency,   but   they   will   use   the   technology  behind  it.    

   

“Although  there  are   risks,  I  don’t  see  them  

(12)

3.2

Tuur  Demeester:  Cryptocurrencies  will  cause  a  paradigm  shift  on  the  

financial  market  

  What  impact  does  cryptocurrency  have  on  the  world  in  the  long  term?    

Just   like   the   Internet   has   broken   open   the   information   market,   one   can   expect   the   same   paradigm  shift  to  occur  with  cryptocurrencies  on  the  financial  market.  Barriers  for  entry  have   disappeared   and   people   can   now   choose   freely   what   currency   to   hold   and   use.   The   traditional  financial  system  is  being  challenged  to  step  up  their  game  in  terms  of  efficiency   because   the   Bitcoin   environment   is   removing   middlemen.   Bitcoin   allows   transactions   anywhere,   anytime   and   with   no   additional   costs.   It   does   not   mean   that   banks   will   become   completely   obsolete,   but   it   does   entail   that   many   of   the   transactions   for  

which   we   used   to   enlist   our   bank   can   now   be   organised   by   the   decentralized   systems   of   cryptocurrencies.   Cryptocurrency   allows   free   access   to   capital   markets   to   everybody   with   a   smartphone   without  imposing  any  capital  controls.  It  allows   for   easier   access   to   microcredit   and   easier,   more   transparent   crowd   funding.   Bitcoin   currently  has  5  million  users.  If  Bitcoin  were  to   follow  the  growth  of  the  Internet  (which  is  not   unrealistic),   Bitcoin   could   have   500   million   users  in  2020,  and  1  billion  users  in  2024.      

What  game  changers  for  cryptocurrency  do  you  foresee  in  the  nearby  future?  

First  of  all  it  can  be  expected  that  we  will  soon  see  mainstream  adoption  of  cryptocurrencies.   The   large   corporations   will   soon   start   promoting   Bitcoin   to   the   early   majority,   in   a   similar   way  to  what  happened  with  AOL  and  Windows  95.  Secondly,  there  will  soon  be  many  more   applications  of  Bitcoin  in  daily  life.  Bitcoins  might  be  bought  at  the  post  office,  or  could  be   used  at  Western  Union  to  transfer  money  to  foreign  relatives.  It  will  become  more  ‘real’  and   independent  from  the  Internet.  Finally,  in  the  middle  to  long  term  Wall  Street  will  become   interested   in   Bitcoin   and   Bitcoin   companies   as   investment   vehicles.   This   will   open   up   the   Bitcoin  world  to  other  industries  seeking  investment  opportunities  and  growth.  For  instance:  

Tuur  Demeester  is  an  economist  specialised  in  the  risks  of  financial  systems   and   investor-­‐protection   against   systemic   crises.   He   was   investigating   economic  crises  and  recessions  in  Latin  America  when  he  first  came  across   Bitcoin  in  2011.  From  2012  onwards,  Tuur  has  recommended  Bitcoin  as  an   investment  object,  and  has  been  in  touch  with  the  Bitcoin  community  to  be   on  top  of  the  latest  trends  in  the  Bitcoin  ecosystem  and  adjacent  systems.    

“The  traditional   financial  system  is   being  challenged  to   step  up  their  game”  

(13)

insurance  companies  could  operate  on  a  global  scale  since  Bitcoin  knows  no  entry  barriers.   In   the   end,   cryptocurrency,   and   probably   Bitcoin,   might   develop   into   an   independent   financial   system.   This   will   give   rise   to   Bitcoin   exchange   markets,   credits   being   given   in   Bitcoins  and  companies  operating  solely  with  Bitcoin  payments.    

Which  threats  or  challenges  do  you  foresee  for  cryptocurrency  and  specifically  for  Bitcoin?   To  answer  this  question  we  need  to  distinguish  between  Bitcoin  as  a  technology,  Bitcoin  as  a   financial   system   and   the   technology   of   cryptocurrency   in   general.   Cryptocurrency   as   a   technology   has   already   proven   its   value   and   seems   to   be   here   to   stay.   It   has   many   advantages  over  the  traditional  systems  and  is  highly  efficient.  Bitcoin  is  just  one  instance  of   a  cryptocurrency  system,  so  it  could  be  that  it  contains  Bitcoin-­‐specific  bugs  or  weaknesses.   The  advantage  of  Bitcoin  as  a  technology  however,  is  that  through  its  open  source  software,   these   bugs   can   be   mended   easily   upon   an   encounter.   The   biggest   risk   for   Bitcoin   as   a   technology   and   financial   system   is   its   complexity:   severe   bugs   might   cause   a   temporary   panic  amongst  its  users  because  they  do  not  understand  what  is  happening4.    

Parallel   to   the   developments   mentioned,   regulation   forms   a   major   concern   for   the   companies  that  are  professionally  involved  with  cryptocurrency.  Some  changes  in  regulation   could  render  their  activities  illegal5,  which  would  make  it  impossible  for  them  to  operate.     Where   it   concerns   regulation   of   Bitcoin   as   a   currency   and   financial   system,   the   picture   is   rather  complex.  A  part  of  the  market  using  Bitcoin  is  above  water,  which  is  the  white  market   whereas  another  part  is  under  water  and  can  be   seen   as   the   grey   or   black   market.   Extra   regulation  on  Bitcoin  would  force  Bitcoin  further   under   water,   with   more   of   the   Bitcoin   transactions   on   the   grey   and   black   markets.   Therefore   I   expect   that   governments   will   moderate  their  regulating  activities  for  Bitcoin  to  keep  transactions  controllable  in  the  white   market,  because  that  would  keep  the  door  open  for  taxation  in  one  form  or  another.  In  the   end,   we   will   find   a   mixed   landscape   of   governments   embracing   Bitcoin   while   others   will   reject  it  to  some  extent.    

                                                                                                               

4     In  February  2014  a  known  bug  in  the  Bitcoin  protocol  was  allegedly  the  cause  for  major  problems  at  one  of  

the  largest  and  oldest  Bitcoin  exchange  in  the  world,  Mt.Gox.  This  so-­‐called  "Transaction  Malleability"  bug   made  it  possible  to  change  the  unique  ID  of  a  Bitcoin  transaction  before  it  became  confirmed  on  the  block   chain,  resulting  in  losses  of  large  amounts  of  bitcoins,  the  bankruptcy  of  Mt.Gox  and  the  shutdown  of   several  smaller  exchanges.          

5     For  example:  regulation  classifying  bitcoins  as  a  currency  or  financial  instrument  could  make  it  illegal  to  

provide  trade/exchange  services  without  a  government  license.  Other  examples  include  strict  KYC   requirements  or  heavy  tax  or  administrative  burdens.  

“I  expect  that  governments  will   moderate  their  regulating  activities  

for  Bitcoin  to  keep  transactions   “controllable  in  the  white  market”  

(14)

Besides   risks   and   challenges   concerning   regulation,   there   are   important   risks   associated   with   systemic   errors   and   risks   associated   with   growth.   Bitcoin   is   focused   on   watertight   security,   but   has   to   sacrifice   speed   in   return.   In   the   coming   years  we  can  expect  new  systems  and  technologies  to  resolve  

this   lack   of   speed   as   Bitcoin   continues   to   grow   as   a   platform.   In   other   words,   I   think   scalability  issues  are  more  of  a  growing  pain  than  a  systemic  risk.  It  could  also  happen  that   current   technology   is   driven   out   by   more   advanced   technology.   You   could   compare   it   to   when   MySpace   was   surpassed   by   Facebook’s   growing   momentum.   For   the   time   being   however,  we  have  to  work  without  these  technologies  as  we  already  experience  the  slowing   down   of   the   Bitcoin   system.   It   is   key   for   the   growth   of   cryptocurrencies   and   Bitcoin   that   other  companies  and  protocols  take  over  part  of  Bitcoin’s  processes  in  order  to  allow  it  to   scale  up  further.    

Do   you   think   traditional   financial   institutions   feel   pressured   by   the   advent   of   cryptocurrencies?  

The  general  message  in  modern  history  has  been:  adapt  or  perish.  The  telecom  companies   that  refused  to  jump  on  the  Internet  bandwagon  in  the  nineties  perished  one  by  one.  It  is   important  to  realise  that  Bitcoin  will  represent  a  similar  change  to  our  financial  system.  Our   traditional   financial   institutions   should   take   a   close   look   at   where   they   have   the   upper   ground  compared  to  Bitcoin.  For  banks  this  could  be  corporate  banking  for  example,  as  they   know  how  to  eliminate  or  hedge  risks.  Insurance  companies  have  tremendous  amounts  of   data   they   could   utilise   to   add   value   to   the   current   Bitcoin   value   proposition.   Interesting   synergies   could   be   realized   by   the   integration   of   the   old   systems   with   the   new   Bitcoin   system.  Banks  can  draw  valuable  lessons  from  the  clean  cut  between  the  holding  entities  of   Bitcoins   and   the   trading   entities.   It   is   best   if   banks   do   not   wait   for   the   regulation   on   cryptocurrency   or   Bitcoin   to   arrive,   rather   they   should   proactively   take   a   stance   on   this   matter  and  start  researching  how  they  can  add  value  to  Bitcoin,  and  Bitcoin  to  them.    

What  function  do  you  hope  cryptocurrency  will  fulfil  in  society  in  5  years?  

Currently  we  are  experiencing  a  normalcy  bias  in  Europe,  which  causes  us  to  underestimate   both   the   possibility   and   effects   of   another   (financial)   crisis.   At   this   moment,   we   should   actually  anticipate  the  next  country  or  bank  to  default.  If  another  crisis  happens,  bail-­‐ins  will   become  the  new  reality.  These  bail-­‐ins  undermine  the  faith  and  trust  in  traditional  central   banking  institutions  and  can  drive  consumers  to  Bitcoin,  transforming  Bitcoin  from  a  back-­‐up   financial  system  to  a  mainstream  financial  system.    

This  shift  in  acceptance  will  cause  four  things  to  happen.  First  of  all,  cryptocurrency  will  be  a   worldwide  accepted  safe  haven.  It  will  represent  the  new  offshore  banking.  Secondly,  many   cities  and  even  countries  will  have  cryptocurrency  economies  in  which  all  their  transactions   will  take  place.  Thirdly,  cryptocurrencies  will  have  over  100  million  users  (more  likely  close  to   500   million   users).   Lastly,   we   will   have   the   first   financial   services   based   on   the   Bitcoin   system.  These  could  be  insurance  companies,  credit  markets,  loans  and  crowd  sourcing.    

   

“Scalability  issues  are   more  of  a  growing  pain  

(15)

3.3

Simon  Lelieveldt:  The  colouration  of  coins    

 

How  do  you  think  cryptocurrency  is  affecting  our  world?  

Technology   has   always   had   the   power   to   fundamentally   change   our   business   models   and   business   relations.   The   advent   of   the   Internet   as   a   commonplace   technology   has   created   more  balanced  peer-­‐to-­‐peer  relationships  and  has  reshuffled  traditional  chains  of  business   processes   in   most   industries.   The   same   is   going   on   in   the   payments   and   transactions   industry,   we   are   constantly   working   on   structuring,   representing   and   securing   “value”.   Cryptocurrencies   are   simply   the   next   stage   in   the   development   of   payments   and   transactions.  In  European  and  Northern  American  society,  money  and  its  stability  are  such   sensitive   issues   that   the   amount   of   regulation   and   governance   applying   to   payments   and   transactions   became   quite   substantial.   Society   has   definitely   showed   interest   in   cryptocurrency,  but  is  slow  to  accept  cryptocurrency  as  a  real  currency.    

What  cryptocurrency  related  game  changers  do  you  foresee  in  the  mid  to  long  term?   We  should  look  for  game  changers  in  a  few  directions:  

• Breaking  down  of  trust  through  big  security  breaches  or  governance  incidents;   • Big  brands  accepting  cryptocurrencies  as  a  means  of  paying;    

• The  development  of  an  alternative  (private)  currency  which  is  much  more  efficient  

than  existing  popular  cryptocoins.  

Given  the  above  examples  of  game  changers,  I  think  the  basic  concept  of  the  protocols  and   its  peer-­‐2-­‐peer  character  is  here  to  stay  in  one  form  or  another.      

To   what   extent   do   you   think   existing   financial   institutions   feel   pressured  by  the  advent  of  cryptocurrencies?  

When  I  look  at  consumer  behaviour,  I  do  not  think  a  lot  has  changed   or  will  change  a  lot.  Consumers  seem  somewhat  reluctant  to  embrace   cryptocurrency  and  perceive  it  to  have  high  risk.  This  would  mean  for   especially  banks  that  they  do  not  have  to  fear  losing  their  customers  or   revenue  streams  just  yet.  Above  that,  banks  can  allow  themselves  to  

take  a  reserved  stance:  if  cryptocurrencies  would  grow  to  have  a  significant  demand  or  value   in  society,  it  will  need  to  be  regulated  anyway.    A  more  pressing  problem  for  banks  is  the   parties  that  offer  cryptocurrencies  in  one  form  or  another.  They  bring  a  compliance  risk  into   the  bank  with  a  certain  chance  for  onboarding  “wrong”  customers,  which  in  turn  leads  to  

Simon   Lelieveldt   is   a   prominent   Dutch   banking   &   payments   consultant,   specialised   in   aligning   business   processes   and   legal   rules   in   electronic   payments.  Simon  went  on  to  work  for  ING  Postbank,  the  Dutch  central  bank   (DNB)   and   the   Dutch   Banking   Association   (NVB).   He   has   been   involved   in   the  supervision  of  the  first  Dutch  e-­‐money  schemes  and  in  setting  up  SEPA.   Simon  currently  acts  as  a  compliance  officer  for  a  supervised  institution.    

“Banks  do  not   fear  losing  their  

customers  or   revenue  streams  

(16)

caution  or  reluctance  to  accept  some  of  these  parties.  In  the  end,  I  think  banks  in  Europe  did   –  for  some  time  –  not  have  sufficient  time  and  resources  to  follow  up  on  cryptocurrencies.   They  were  too  busy  with  the  SEPA  deadline,  so  cryptocurrency  had  to  take  the  back  seat.     What  function  do  you  think  cryptocurrency  will  fulfil  in  society  in  5  years?  

At  the  moment,  cryptocurrency  still  has  that  connotation  of  “money  to  the  people”  and  of   being   a   democratic   system.   However   this   is   a   misconception;   even   fully   decentralized   currencies   will   see   the   rise   of   organisations   that   manage,   develop,   implement   and   exploit   services   in   the   name   of   the   cryptocurrency   or   its   protocol.   We   will   see   this   evolve   in   the   coming  years.  Organisations  behind  these  currencies,  or  built  on  top  of  them,  will  seek  to   influence   and   control   these   currencies.   The   next   question   is:   how   trustworthy   will   these   important   but   more   or   less   informal   organisations   be?   The   awareness   that   cryptocurrencies  are  in  the  end  not  just  made   by   the   people   and   for   the   people,   should   become   more   prominent   so   that   we   are   better   prepared   for   malicious   organizations   that   also   occupy   the   cryptocurrency   space.   Nevertheless,   if   a   cryptocurrency   is   about   to   gain   significant  momentum  and  volume  in  society,  regulation  will  come  in  place  and  there  will  be   some   authority   centralising   the   cryptocurrency   governance.   Money   is   too   sensitive   of   an   issue  to  leave  unregulated.  It  is  best  to  be  realistic  about  this,  yet  users  that  choose  to  use   cryptocurrencies  for  the  reason  that  it  will  stay  unregulated  might  be  disappointed.    

In   the   future   it   is   to   be   expected   that   we   will   have   “coloured   coins”,   which   will   include   certain   normative   values   that   a   consumer   likes   to   associate   with.   At   the   moment   cryptocurrency  mostly  has  the  libertarian  association,  which  appeals  to  a  certain  audience.   In  a  similar  way,  coloured  coins  can  be  put  to  use  for  specific  societal  causes,  spent  at  certain   retailers   or   entail   coin-­‐specific   discounts.   My   personal   favourite   –   being   a   piano   player   as   well  –  would  be  the  music  coin,  that  connects  the  artists  more  directly  with  their  audience   and  disintermediates  unnecessary  elements  from  the  music  value  chain.  More  generally:  a   whole   new   range   of   business   models   becomes   possible   through   the   colouration   of   coins.  

“…  even  fully  decentralized  currencies   will  see  the  rise  of  organizations  that  

manage,  develop,  implement  and   exploit  services  in  the  name  of  the  

(17)

 

4

The  e

ntrepreneurs

 perspective

 

4.1

Jouke  Hofman  &  Niels  van  Groningen:  Start  your  car  with  a  private  key    

   

 

How  is  cryptocurrency  affecting  our  world?  

Niels:   It   is   difficult   to   look   into   the   future,   but   we   see   cryptocurrencies   influencing   the   international  payments  sector,  specifically  micro  payments  and  online  payments.  It  is  hard  to   imagine  a  world  in  which  cryptocurrencies  will  not  be  used  for  online  payments  five  years   from   now.   For   some   of   us   cryptocurrency   feels   similar   to   when   the   Internet   came   about:   something  that  will  fundamentally  change  our  society  although  we  do  not  fully  understand   its  implications  yet.  At  this  point  in  time  we  are  mainly  seeing  payment  solutions,  although   business  ideas  outside  of  the  payments  domain  are  widespread  and  ready  to  go,  for  instance   using   a   block   chain   to   send   digital   invoices.   One   of   the   essential   things   that   we   hope   cryptocurrency   will   continue   doing,   is   making   it   easier   to   do   business   and   execute   transactions  in  a  more  transparent  way:  we  believe  this  would  positively  affect  society  in  the   long  term.      

Jouke:   Also   in   the   sense   of   ideology   I   think   cryptocurrency   is   changing   our   mentality.   Companies  in  Bitcoin  are  more  or  less  forced  to  be  transparent  about  everything,  since  the   block  chain  is  open  to  everyone.  This  lowers  the  threshold  for  newcomers.  That  is  not  the   case  for  the  existing  financial  industry.  To  build  up  trust  it  is  

vital   to   show   your   cards   and   be   transparent   about   your   course.   Without   trust,   you   cannot   exist   in   an   anonymous   decentralised  world.      

What  key  events  do  you  foresee  for  cryptocurrency  in  the  nearby  future?  

Jouke:  A  key  event  would  be  the  acceptance  of  Bitcoin  by  a  tax  authority  somewhere  on  the   world.   If   this   traditional   governmental   organisation   would   accept   Bitcoin,   or   any   other   cryptocurrency  for  that  matter,  it  would  mean  a  huge  step  forward.  And  with  this  step  many   new  consumers  and  merchants  will  start  utilizing  the  cryptocurrency  Bitcoin.    

Whichever  event  will  be  the  game  changer,  it  will  probably  be  driven  by  one  of  the  following   factors.   First   of   all,   the   current   lack   of   opportunities   to   innovate   in   the   financial   sector.   Secondly,  the  limitations  which  the  financial  sector  imposes  on  individuals,  businesses  and  

Jouke  Hofman  (top  picture)  and  Niels  van  Groningen  (bottom  picture)  are   two   of   the   three   original   founders   of   Bitonic.nl,   a   Dutch   website   where   consumers   can   buy   Bitcoins   in   an   easy   and   trusted   way,   using   a   popular   pay-­‐by-­‐bank   method   (iDEAL).   Over   the   past   two   years   they   have   grown   tremendously  in  terms  of  amount  of  bitcoins  sold,  number  of  employees   and   offered   services   and   solutions.   Within   the   Dutch   scene   for   cryptocurrency,  Bitonic  is  seen  as  a  leading  party  that  lowered  the  barriers   for  the  average  consumer  to  obtain  bitcoins.    

“Without  trust,  you  can   not  exist  in  an  anonymous  

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institutions.  Lastly,  there  is  the  common  mistrust  of  the  financial  sector,  which  is  perceived   as  closed  and  not  transparent.  

What  main  challenges  or  risks  do  you  see  for  cryptocurrency?  

Niels:  Within  the  Bitcoin  sphere,  we  have  experienced  some  problems  lately  that  we  regard   as  growing  pains.  Obtaining  Bitcoins  or  other  cryptocurrencies  is  still  not  user-­‐friendly  at  all,   especially   for   novice   users.   Nonetheless,   the   foundation   is   quite   strong   and   the   Bitcoin   community  has  been  quick  with  solving  problems  that  have  arisen  over  the  past  four  years.   It’s   comparable   to   the   development   of   Wikipedia:   first   it   was   deemed   an   untrustworthy   source  of  information,  but  after  years  passed  by,  it  is  now  one  of  the  corner  stones  of  the   Internet  and  global  information.  

We   also   see   regulation   as   an   important   factor.   However,   if   regulation   is   seen   as   too   restraining   or   otherwise   not   adequate,   it   can   hamper   the   development   of   innovations.   Right   now   the   cryptocurrency  industry  is  barely  regulated  which   makes   it   easy   for   companies   to   develop   new  

innovative   services   without   having   to   worry   about   regulation.   When   regulatory   requirements   get   tougher,   companies   will   need   a   certain   scale   to   enter   the   regulated   market.   For   instance,   when   start-­‐up   companies   are   required   to   have   payment   institution   licenses,   it   is   logical   that   they   will   not   be   able   to   start   doing   business   because   it   takes   a   massive  amount  of  resources.  So  at  this  point  the  biggest  fear  for  the  cryptocurrency  world   would  be  too  much  regulation  or  “panic”  regulation  like  forbidding  Bitcoin  as  a  whole,  since   it  will  smother  young  companies  with  a  bright  ideas.  

How  do  you  think  existing  players  in  the  financial  industry  will  deal  with  cryptocurrency?   Jouke:  At  this  point  we  see  that  banks  do  not  feel  threatened  yet  although  they  are  quite   sceptical   about   what   cryptocurrencies   might   bring.   Especially   the   ‘open’   nature   of   most   cryptocurrencies  is  contrary  to  how  business  is  conducted  at  financial  institutions  nowadays.   Some   banks   are   actually   quite   inquisitive   and   want   to   explore   the   opportunities   that   cryptocurrency  might  bring.  To  us  it  is  clear  that  there  are  opportunities  for  the  traditional   financial   institutions   to   capitalize   on.   For   example,   we   believe   banks   could   facilitate   the   storage   of   cryptocurrencies   in   a   safe   and   customer   friendly   way.   Also   we   see   that   cryptocurrency  can  enable  cheap  international  payments  for  the  masses,  which  at  this  point   in   time   is   still   a   costly   enterprise   for   an   average   consumer.   In  

services   like   international   payments   banks   and   remittance   providers  might  have  a  market  to  lose,  although  we  do  not  think   traditional   financial   institutions   will   disappear.   The   traditional   players  will  have  to  come  up  with  an  answer  though  if  they  want   to  absorb  the  possibilities  that  cryptocurrencies  might  bring.    

“Cross-­‐currency   transactions  will  

increasingly  be   carried  out  by   means  of  Bitcoin.”   “if  regulation  is  made  that  is  too  

restraining  or  otherwise  not   adequate,  it  can  hamper  the   development  of  innovations.”  

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What  role  do  you  think  cryptocurrency  will  play  in  5  years?  

Jouke:   In   three   years,   everyone   on   earth   will   know   about   Bitcoin.   For   us   it   feels   like   the   discovery   of   the   Internet   or   the   advent   of   the   mobile   phone.   A   lot   of   things   are   going   to   change!    

In  about  five  years  cryptocurrencies  will  be  10,  100  or  a  1000  times  larger  compared  to  now.   We  think  that  Bitcoin  in  particular  will  remain  a  driving  force  behind  all  the  cryptocurrency   initiatives.  The  protocols  behind  cryptocurrencies  will  also  be  used  in  other  contexts,  like  the   transaction   of   property,   the   registration   of   cars,   or   various   types   of   stock-­‐market   trades.   Keys  to  a  car  could  be  encrypted  in  a  block  chain  and  passed  on  from  owner  to  owner.  You   would  be  able  to  start  a  car  with  a  private  key  you  have  just  received.    

Niels:  Anything  else  for  which  we  need  notaries  at  this  point  could  basically  become  more   secure  and  transparent  by  using  block  chains.  The  primary  application  that  we  are  using  now   is  doing  transactions,  but  with  the  block  chain  technology  we  can  do  so  much  more.    

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4.2

Tony  Gallippi:  The  continuance  of  the  evolution  of  digital  money  

How  is  cryptocurrency  affecting  our  world?  

I   think   Bitcoin   and   the   dawn   of   cryptocurrency   is   probably   the   biggest   opportunity   for   innovation,  job  creation  and  capital  formation  since  the  dawn  of  the  Internet  itself.  

First  of  all,  the  technology  of  cryptocurrency  is  going  to  lead  to  a  dramatic  increase  in  the   connectivity  of  businesses  around  the  world.  It  is  really  going  to  revolutionize  e-­‐commerce,   especially  cross  border  e-­‐commerce,  both  in  the  sense  of  B2B  and  B2C.  When  it  concerns   payments,   cryptocurrency   offers   a   borderless   payment   mechanism   that   might   change   the   world  like  e-­‐mail,   the   World   Wide   Web,   or   voice   over   IP   (VOIP)   did.   Second,   services   that   make  money  on  fees,  park  money  or  move  money  around  the  world  will  be  commoditised.     The  cheapest,  most  counterfeit-­‐proof  form  of  payment  out  there  is  Bitcoin.  

I  do  not  think  countries  will  adopt  cryptocurrency  as  their  national  currency,  although  I  do   think  it  will  be  permitted  to  use  Bitcoin  as  an  overlay  currency  like  gold  or  silver.  It  might  be   much  like  when  the  Euro  first  came  out;  you  could  still  use  Marks,  Francs  and  Guilders  but   you  could  use  the  Euro  simultaneously.  The  currencies  will  co-­‐exist;  people  can  trade  it  or   use  it  for  their  cross-­‐border  transactions  or  anywhere  else  where  it  makes  sense.  

How  do  you  think  existing  players  in  the  financial  industry  will  deal  with  cryptocurrency?   Companies   that   make   their   money   in   cross-­‐border   payments   will   be  

the  first  to  get  disrupted.  The  Credit  Card  companies  will  be  the  next  to   be   affected   because   they   make   money   on   overdraft   fees,   over   limit   fees,   monthly   fees,   authorization   fees   and   statement   fees.   Since   the   system   is   much   more   efficient,   all   of   those   fees   will   potentially   disappear  when  you  use  cryptocurrency.    

In  the  nearby  future  we  will  still  need  the  banks  for  loans,  savings  and  security.  Nonetheless,   the  basic  transaction  is  going  to  be  commoditized.  Therefore  the  banks  have  to  do  some  soul   searching   and   get   back   to   actual   banking   instead   of   trading   derivatives   and   things   alike.   Banks  definitely  steered  away  from  their  original  charters  and  are  active  in  fields  that  they   were  not  designed  for.  However,  the  banks  that  realize  that  they  need  to  go  back  to  basics   will  be  the  ones  left  standing  in  the  end.  

Banks  basically  have  two  options.  They  can  either  act  like  the  music  industry  did  back  when   mp3s  became  mainstream:  fight  the  new  development  tooth  and  nail,  or  they  can  pick  it  up  

Tony   Gallippi   is   owner   and   CEO   of   BitPay,   a   provider   of   Bitcoin   payment   solutions   for   businesses   based   in   Atlanta,   Georgia.   Together   with   his   friend   (and  co-­‐founder  of  BitPay)  Stephen  Pair,  he  found  out  about  Bitcoin  in  2011.   Intrigued  by  the  ideas  behind  Bitcoin,  they  realized  that  Bitcoin  could  be  a  low   risk  and  low  cost  payment  alternative  for  Internet  businesses  while  reaching  a   global  customer  base.  They  decided  to  build  tools  that  would  help  merchants   to  accept  Bitcoin  payments  and  that  is  how  BitPay  was  born.  

“Banks  have  to  do   some  soul   searching  and  get  

back  to  actual   banking”  

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like  the  telecom  companies  did  with  VOIP.  When  VOIP  came  out,  Telco’s  could  have  fought   it,  but  instead  they  adopted  it  and  used  it  for  their  internal  communications  to  dramatically   reduce  their  costs.  They  survived  because  they  embraced  a  new  technology.    

Banks   that   in   one   way   or   another   will   embrace   cryptocurrencies   will   be   able   to   offer   services   to   their   customers   that   other   banks   cannot.   Imagine   that   a   bank   would  suddenly  announce  that  customers  could  send  up  to  a   thousand  dollars  anywhere  in  the  world  on  the  same  day  for   a  one  dollar  fee.  That  would  be  huge;  people  would  be  lining   up  to  use  this  service  because  normally  it  would  cost  them  at   least  30  dollars  to  do  that  today.  As  soon  as  one  bank  starts  

doing  this,  other  banks  will  be  quick  to  follow.  My  take  is  that  the  innovative  banks  will  win   whereas  banks  that  choose  to  build  a  moat  around  their  legacy  business  model  will  lose.     What  game  changers  do  you  foresee  for  cryptocurrency  in  the  nearby  future?  

There   are   a   few   things   I   can   think   of   that   would   really   change   the   way   cryptocurrency   is   embedded   in   our   global   society.   If   a   big   bank   would   embrace   Bitcoin   (or   any   other   cryptocurrency  for  that  matter),  it  would  definitely  be  a  game  changer.  The  same  goes  for  if   a   very   large   web   merchant   would   start   to   adopt   cryptocurrency.   If   one   of   the   top   ten   American  retailers  would  start  to  accept  Bitcoin,  people  would  wake  up.  Other  merchants   would  suddenly  be  incentivized  to  look  at  the  advantages  of  cryptocurrency  in  terms  of  risk,   cost  and  reach.  This  could  happen  anywhere,  also  with  a  major  retailer  in  Europe  that  wants   to  expand  to  other  countries.    

Another  game  changer  would  be  if  a  big  corporate  party  would  start  using  for  instance  the   multi-­‐signature   feature   of   the   Bitcoin   protocol:   you   could   use   this   feature   to   issue   five   private   keys   amongst   executives   for   instance.   Any   three   of   the   five   can   now   spend   the   corporation's   money.   This   could   mean   that   the   use   of   the   protocol   would   spread   quickly   through  the  corporate  world.    

When  governments  are  looking  for  bailouts  like  we  saw  in  Cyprus,  people  could  be  driven   towards  alternatives  like  Bitcoin  since  governments  really  cannot  seize  those6.  Governments   can   make   it   illegal,   threaten   to   throw   you   in   jail,   but   they   cannot   steal   it.   You   can   punish   people   who   use   the   technology   for   bad   things,   but   you   cannot   regulate   the   whole   technology  itself.    

What  new  business  models  do  you  foresee  that  we  do  not  see  today?  

BitPay   is   basically   part   of   one   of   the   first   layers   being   built   upon   the   Bitcoin   protocol   in   particular,  together  with  for  instance  the  exchanges.  What  I  think  we  will  see  is  that  people   will  start  to  experiment  with  other  aspects  of  especially  the  Bitcoin  protocol,  and  not  only  

                                                                                                               

6          During  the  economic  crisis  in  Cyprus  in  2013  there  was  reports  of  a  rush  towards  Bitcoin  in  other  EU  

countries,  especially  Spain.  Technology  website  Motherboard  wrote  an  in-­‐depth  article  about  this  topic.  

“Imagine  that  a  bank  would   suddenly  announce  that   customers  could  send  up  to  a   thousand  dollars  anywhere  in   the  world  on  the  same  day  for  a  

1  dollar  fee.  That  would  be   huge”  

References

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