Bitcoin needs to find creative uses to get traction say pioneers
(l-r) Nic Cary, Blockchain; Stephen Pair, BitPay; Will O’brien, BitGo
Leaders in the Bitcoin community have called upon innovators to come up with creative uses for the cryptocurrency, with one flagging it could mean the end to mobile phone contracts.
Speaking on a panel examining the origins and future of Bitcoin – a cyber currency created in 2009 which is ‘mined’ by computers and can be freely traded online – Stephen Pair, who runs payment gateway BitPay, described the network built up around it as “the most powerful decentralised computing network ever created”.
Will O’Brien, CEO of security system BitGo, added: “There’s no putting the genie back in the bottle here. For the first time we can have a decentralised clearing system around a currency.
“Every other system always has one point of failure – Bitcoin has a computational network built up around it which is 38,000 times as powerful as all the supercomputing power in the world.
“The rate of venture capital investment is far greater than the early days of the internet.”
The idea for Bitcoin, the biggest of several cryptocurrencies, came from a paper posted anonymously in 2008, and is based on the premise that it will be a finite resource with only 21 million being created.
Bitcoins are ‘mined’ by people using algorithms to solve problems which become increasingly complex as more of it is uncovered – with the rate of discovery slowed down as it becomes scarcer.
In a separate session overnight Eric Schmidt, the executive chairman of Google, said this coding known as a “blockchain” – which only allows for a certain number of copies to be made – had potential impacts on other industries.
“Everyone always assumed you could not build copies that could not be created infinitely, and there’s so many industries where the economics have benefited from scarcity, and I think it’s completely unexplored,” he said.
“Think about the amount of places it would be useful to know the number of extant copies in the physical world.”
However Bitcoin faces resistance from regulators who fear it could be used as a money laundering tool for criminals, with North Korea and Libya amongst countries to ban its use.
Nic Cary, CEO of discovery platform Blockchain, admitted while it could be used for criminal purposes it was down to human intent.
“Look at Google Maps, you could use that to plan your trip from here to the convention centre, or you could use it to plan a getaway from a bank robbery,” he said. “It’s the same thing.”
But Pair pointed out the system does not allow for fraud as every transaction is recorded and timestamped permanently, whilst it would never become worthless unless a “fatal flaw” was found in the technology underlying it.
Whilst the number of bitcoins is limited they can each be divided almost infinitely, with the price driven by market forces, and transactions carried out for free.
Several companies including Dell accept the currency already, whilst some employers also allow employees to be paid in it.
O’Brien pointed to one use of the currency as driverless cars being able to communicate and pay each other to move over and let them past when the occupant is in a rush.
“The future is really sci fi but the applications are pretty down to earth,” he said.
“I don’t think the future of Bitcoin is that all of us will have Bitcoin wallets and be sitting around paying for Starbuck coffee with that, but there are a lot of places here, there are hyperinflation to governments manipulate currency and it will serve a purpose there, ultimately resulting in better protection of consumers.”
Pair used the example of a mobile network with phones coming preloaded with the currency, and then automatically negotiating with carriers to get the best price for their services, taking out the need for contracts with networks.
The panel was the first in a day long series looking at Bitcoin, the first time the event has been run at the SXSW festival.
Alex Hayes in Austin
“But Pair pointed out the system does not allow for fraud as every transaction is recorded and timestamped permanently,”
For marketing, this is by far the most interesting aspect of Bitcoin. We’ve just witnessed how long it takes to audit 2 years worth of media agency deals. The blockchain could do in 3 minutes what EY took 3 months to do.
While most think that Bitcoin is some anonymous currency for drugs and weapons, the fact is that transactions can be stored alongside data in an unchangeable and unforgeable way. So an agency could book a TV spot, have the transaction verified on the blockchain, record the fact the spot ran on the blockchain, and report the post on the blockchain.
It’s not going to happen next week, but over the next 10 years I’d be surprised if the media industry isn’t one of the major areas to be impacted by the blockchain.
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