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February 11, 2014


Bill Tetzlaff

Irving, Thanks for the thoughtful summary. I have been reading the popular press articles, but not attempting the cryptography underpinnings, and come to similar conclusions. I do suspect that the anonymity of transactions involving illegal activity is the main attraction, and that the mining aspect is a bit of a Ponzi scheme, ant it may collapse, like the Madoff accounts.

Christopher Carfi

Irving, thank you for the thoughtful and nuanced look at the space. It certainly does feel like early days. Many of your points and counterpoints are aligned with the things I am seeing as well. It is likely that the most interesting aspects are the protocol possibilities, perhaps even more so than the currency aspects themselves.

Mark Montgomery

Greetings Irving. Bitcoin is dangerous from a security perspective - has gone further faster than I thought it would, but obviously any global currency will be subject to security and regulation. However, I think your comments on taking decades and seeking consensus on disruptive technology is dangerous. In fact I know it is. AT&T said almost the precise thing to Vint Cerf about the Internet, MS with Google - the list is long just in my own circles and history. Disruptive technology doesn't wait for consensus or ask permission of incumbents. While it's true that it may take a decade or two to become dominant, by that time it's too late for others to catch up, and the velocity in which big bang disruptions are occurring is increasing--roughly half the time it took a decade ago in digital environment from initial investment to become market leaders. They are rare. No denying they exist, or that a strong global demand exists for alts to banking. That said, I don't personally see future innovation in currency rising in Bitcoin fashion at all. Rather I agree with you that a conversion will take place. But that shouldn't necessarily rest easy with banks. .02- mm


Very thoughtful, educated, and objective analysis. Well done.

Aditya Menon

Irving - we discussed yesterday how Bitcoin provides real-time value transfer from one individual to another using a publically verifiable distributed ledger, however that existing payment systems required elaborate governance and trust relationships in order to deliver a similar service. For example the CLS system was created to solve a particular problem of risk management for global FX trading to avoid settlement risk. The result was the creation of a global real-time payment and settlement network, however that relied on local RTGS systems for it’s implementation, creating the tiered trust model that I alluded to earlier. Real time payment systems exist within the boundaries of countries, But CLS provided continuously linked settlement across geographies in real time. What this tells us is that financial institutions are quite capable of creating efficient mechanisms for payment and settlement even across borders, albeit for larger value transactions, therefore they may be a way for financial institutions to use the “Concept” of bitcoins to create a more efficient global value exchange that works just as well for small value as it does for large value transactions. If it were built on the same model as CLS, then it would need a low-value real time clearing and settlement system in each country, which exists in some countries – notably – Faster Payments UK, South Africa’s BankServ and India’s IMPS, but not in others. The obvious pitfall of this line of thinking is why would banks shoot themselves in the foot by creating a free or extremely low cost value transfer mechanism ? What's your view ?


If Bitcoin looks like a libertarian attack on the current banking system, that is because the current banking system IS an fascistic attack on Libertarians, As well, Napster has pretty much become YouTube, a huge success!

Further more if you are this so called 'expert on digital money' why not try to some how justify that to readers instead of glossing right over that and going straight into a wild attack bitcoin?

Todd Fletcher

"Perhaps Bitcoin, like the internet, will smoothly evolve from a quirky experiment to a trusted utility. But it could also go the way of Napster"

I think the former, open source projects often overcome the limitations of vision that limit private enterprises. In fact, that has already been the case. Bitcoin has shown this by continuing to evolve and become more robust.

reuven Brenner

Irving, I would say the Bitcoin stuff is pretty simple. Following a roundtable, here is a brief excerpt, published 2 days ago:

best, Reuven Brenner

David Rangel


I very much respect your opinion and think this is a very reasoned and measured post, but I find your conclusions a bit too non-committal. Also, quoting Webster and Fleishman's view (separating the Bitcoin protocol from the currency) leads to an important misunderstanding. This is why:

1) Bitcoin (the cryptocurrency protocol/system) has proven that it can serve as an efficient way to execute transactions globally with minimal friction. That is clear and few dispute it.
2) If you believe that this function (enabling transactions) is valuable (and few would say it is not), then because of how Bitcoin works, the Bitcoin currency MUST have associated value. That is because you cannot separate the currency from the protocol (this is the common misunderstanding).
3) Once you see that the currency is an inseparable part of the system, it is also inevitable that the currency will have some value and role in transferring value in different industries.

Now, I acknowledge that the ultimate winner may not be Bitcoin itself. If something unforeseen happens (e.g., an unexpected bug), it could be another cryptocurrency that emerges as an ultimate winner. But cryptocurrencies are a real technical breakthrough that is here to stay, and because of how they work, their role as an actual currency (store of value, medium of exchange) is inevitable.

I have a longer form explanation in the URL I submitted with this comment.



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