Bitcoin vs Banking [infographic]
“I believe there are multiple billion dollar companies that are going to be built in Bitcoin” — Jeremy Allaire, Circle CEO
The Inside Bitcoins conference and expo in New York City kicked off this morning. Mediabistro Chairman Alan Meckler opened the show with remarks about the growth in professional interest for Bitcoin. Over 2,000 attendees are at the show from 30 countries. There are also 42 exhibitors. Compare this scale to last year’s NYC conference with 150 attendees and 3 exhibitors.
Mr. Meckler compared this point in time for Bitcoin to the early days of the commercial Internet. Meckler started the first trade show for the Internet which grew to 75,000 attendees within 3 years. “Bitcoin has a lot of the trappings of those early days of the Internet,” said Meckler.
Jeremy Allaire, Circle CEO, took the stage to deliver the conference keynote.
Mr. Allaire also put Bitcoin in the context of the commercial Internet, comparing Bitcoin’s life stage today to the state of the Internet in 1994. There has been a surge of entrepreneurial activity, with about 2,000 companies formed in the Bitcoin ecosystem, but there is yet to be a “killer app”, like the Netscape browser was for the Internet.
There is very limited consumer engagement, said Allaire, suggesting that 90% of Bitcoin users are buying and holding as an investment.
“The total volume [of Bitcoin transactions] is equivalent to 1 small cap stock,” said Allaire. “But that shouldn’t be a concern for us.” Allaire said that we should expect mainstream adoption to take 10 years, as it did with the Internet and with smartphones.
Allaire’s company Circle has raised two rounds of funding for a total of $26 million. The company has yet to launch a commercial product or service.
Mr. Allaire touched on a few key themes during his keynote.
Technology – Allaire emphasized the importance of developing core Bitcoin infrastructure. The Bitcoin network can currently handle about 9 transactions per second, said Allaire. “In the vision we have for this platform to carry a large percentage of payments and commerce, that’s not going to scale.”
Identity and security – Allaire said he believes that Bitcoin cannot be fully anonymous from law enforcement. Financial privacy can be preserved in the protocol while enabling an audit trail for chasing criminal behavior. In the development of the Internet, the industry moved toward standards and companies, such as Verisign and RSA, formed to provide identity and security infrastructure for the Web. Without those developments, no one would ever feel comfortable entering their credit cards online.
Government collaboration – The technology needs to remain open, said Allaire, like core Internet protocols from HTTP to SMTP. But the industry needs to embrace and collaborate with governments around the world. Without this partnership, mainstream consumer adoption simply won’t happen, said Allaire.
“We’re still on a 1.0 platform,” explained Allaire, “but that shouldn’t discourage us.” Allaire said he personally believes that there will be several billion-dollar companies created to service the Bitcoin industry. And that’s an exciting future.
