Panelists : Stanislav Wolf (Yacuna AG) , Benjamin Bommhardt (Draglet), Daniel Wicharz (Skrill)
The Yacuna exchange, which is UK based, launched about one month ago, Transactions can be done in either Bitcoin, DogeCoin or Litecoin. These digital currencies can be exchanged against each other, or against EUR/GBP fiat currencies.
Note from the author : We will do an in-depth article about Yacuna AG next week.
Cryptocurrency is a very interesting space, as you can come across certain people who have a strong opinion against it in the beginning. However, after spending some time learning and researching, they look at Bitcoin and other coins in a more positive manner.
Paul Krugman is one of those people, as his first statement was : “Bitcoin is still a kind of ponzi scheme”, which was followed by statements such as “Bitcoin is evil”, “Bits and Barbarism (economies of the stone age)” , “Bitcoin, the antisocial network” and “Golden Cyberfellers.”
As we have come to see over the years, a lot of economics don’t get Bitcoin at all, but in order to bridge the chasm you need to get into the picture. While this will always be a long and somewhat tedious process, we are slowly moving in the right direction.
Interfaces like Cryptsy are evolving into interfaces like Circle. This evolution makes it easier to use these kinds of platforms and get information in a far more user-friendly way. This way, we are breaking down the technology “wall” for novice users.
Some interesting trends can be found when you look at the investment perspective :
2012 : Investment perspective : Intersango (first Bitcoin exchange – closed) & GLBSE (asset exchange – closed) were the only big companies out there. Other investment opportunities could be found in mining companies, where you’d get dividends in return..
2014 : Investment perspective : rebuilding the whole Wall Street infrastructure by making stocks tradeable on the blockchain (CounterParty). We have also seen a 41% Venture Capitalist growth from quarter to quarter, and there are now 66 Bitcoin startups funded by VCs.
Mining equipment has evolved from GPUs, FPGA’s and ASICS into professional data centers used for Bitcoin mining. We have seen a 136% network hashrate growth quarter to quarter. Developer activity on GitHub is also growing by roughly 20% quarter to quarter
Bitcoin 2.0 Systems and Platforms
BitShares (PoS), PeerTracks (will be launched in about 2 months , allowing artists to issue their own coins for crowdsales, presales, a stake in their future earnings,….), CounterParty,, Swarm, Storage(file storage on a decentralized network with data being redundantly stored across different users) are other great projects which are currently available.
MasterCoin, Blazuse (Israeli competitor for Uber with an own application, allowing for decentralized payments through the MasterCoin system), MaidSafe (monetizing spare bandwidth) , Fectum (sign contracts digitally and put out hashes in a sidechain to the Bitcoin blockchain, applying the same security to these documents)
Panel discussion (D = Daniel , B = Benjamin)
Will Bitcoin catch a new technology movement or will other payment systems, such as Skrill, use their customer base to gain the advantage?
D : Skrill aims integrate new technologies into their payment gateway (for example SOFORT). Adding additional payments is the way Skrill conducts business, and it all depends on what the customer demands. If everyone wants to pay with Bitcoin, we will offer BItcoin payments.
If Bitcoin becomes more mainstream, payment providers will follow the trend.
Bitcoin has to become something not just for investors, but also for people who want to use the digital currency in everyday use, such as grocery shopping. The usability for end consumers isn’t where it should be just yet.
B : There are two ways to build trust in a currency, one way is people saying everything is alright, the other way is to make sure people understand the currency itself. The mainstream will not be able to pick up the technology of Bitcoin directly, but other entities such as Paypal will help with spreading the word about Bitcoin.
Exchanges are facing a different problem : liquidity. People are not incentivized to enter new trades into the system. Draglet connects with other exchanges, and also allows for an interconnected orderbook among all exchanges running on the Draglet platform.
Should exchanges create more features for experiences traders?
B : Derivative exchanges are seeing a massive growth in trading volume. DIfferent approaches have different outcomes, it is highly depending on the use case. Markets are still big enough the way they are now, the traditional model is working fine at the moment.
FIat gateways are a bottleneck for exchanges. Buying Bitcoin with fiat currency is still a problem. How can we handle this bottleneck?
D : Credit cards must not be used in order to buy Bitcoins, as stated by VISA, Mastercard and AMEX. Card payments have an incredibly high rate of chargebacks, and should be avoided by all Bitcoin exchanges at any cost. Credit card issuers refuse to work with Bitcoin and will make sure the transaction is reversed.
Online bank transfers from the buyer’s account to the seller’s account is one of the ways to circumvent this. Until a better solution comes along, this is the best way to buy and sell Bitcoins and making sure you get to keep the money afterwards.
Your opinion on decentralized exchanges?
B : There is no instant trading. However, depending on the use case, they could be interesting for the typical user who wants to buy or sell Bitcoin. From the technology point of view, I don’t see the use case yet at this point to be honest.
D : Regulation would make it easier, especially for the mass market to adopt BItcoin. Overall regulation in the European Union for Bitcoin and digital currencies would be a good thing. There are reasons why we have regulations in place for stock markets and fiat currencies.
I would like to see a regulation on a European level, as Bitcoin is borderless and something has to be set up at least in a European way. One set of rules for all countries will ensure licenses cannot be passed from one country to another. Bitcoin shouldn’t be treated differently compared to fiat currency.
B : Regulation should be done on the exchange level. Because of German regulation, it is pretty much impossible to open a fiat currency-Bitcoin exchange, either because of the required funds, or because of rules in regards to employing your staff.
Will exchanges need to look at offshore bank accounts to conduct operations?
B : You can get banking connections going without requiring offshore accounts. The Isle of Man is very open to Bitcoin and other digital currencies.
D : Some countries are overregulated which is not good for st
artups. It is easier to get and hold licenses in certain countries such as the United Kingdom. These licenses can be passported to other countries, such as Germany, and allow holders to conduct the same type of business.
The current regulation is costing jobs in overregulated countries, whereas it creates a lot of jobs in other countries..
Will payment gateway providers become a form of exchanges, and how would that look?
D : Payment processors could include Bitcoin in their portfolio at some point, but they won’t run an exchange any time soon. They focus on providing customers with the services they are looking for. Bitcoin is only the beginning, maybe we could do a lot more with the protocol than just creating monetary value.
Will a fiat currency like the EURO co-exist with Bitcoin 20 years from now?
B : It is hard to predict. The establishment is slowly starting to understand the idea behind Bitcoin and the way it works. We will probably see a lot of cryptocurrencies with different use cases in 20 years.
D : Fiat currencies will not disappear, as banks and government will not give up their power so easily. Who knows if the EURO still exists in 20 years? The central bank will always make sure they have influence on the monetary market. Fiat currencies are being manipulated by the government, which is something I really hate.
What is your opinion on altcoins in general?
B : Loads of currencies are trying to evolve and get investments going, and every cryptocurrency can survive as long as there is a strong use case. Bitcoin is needed because of its liquidity, but altcoins are far easier to get your hands on.
Bitcoin is no longer the gatekeeper for cryptocurrency I think. Bitcoin took years of hard work to get integrated into platforms, and we need to increase Bitcoin awareness.
D : I like competition in general. Currencies are pretty much all the same, as they are used for trading, buying, … There are a lot of different fiat currencies as well, depending on where they are used. (Swiss Franc GBP, USD, …) There will always be alternative coins next to Bitcoin.
Should consumers be more protected when it comes to investing in altcoins?
B : People are empowered, but that power comes with great responsibility. If you have an account on an exchange, they enable you to recreate your password. It depends on the customer and his/her technical understanding.
D : Several credit card issuers offer different kinds of customer protection. Many merchants want to accept Bitcoin as they can hold a portion of it to turn a bigger profit. Consumers are not really incentivized to use Bitcoin, and if they are not protected properly, they will keep using traditional payment methods such as fiat currencies or credit cards.
How would regulation keep anonymity features in mind? And how can they find the middle ground between no regulation and overregulation?
D : Regulation is really important for the mass market in order to adopt Bitcoin. More regulation could lead to Bitcoin being offered as an alternative payment method such as prepaid cards for Itunes et cetera.
We would like to thank the BTC2B in Brussels crew for the event and giving us the chance to attend this great panel!