Peter Vessenes, Chairman of Bitcoin Foundation offers a glimpse into Bitcoin’s future, its benefits and the challenges it faces as adoption grows
It is an incontrovertible fact that Bitcoin adoption is rapidly growing around the world, with more and more merchants accepting it as payment. Bitcoin-dispensing ATMs are springing up in Asia and beyond.
With this, it becomes imperative to take stock of what lies ahead for Bitcoin, as well as cryptocurrencies in general. e27 brings you an exclusive chat with Peter Vessenes, Chairman of the Bitcoin Foundation, as well as CEO of Coinlab, a US-based incubator for cryptocurrency startups.
Altcoins a ‘massive experiment’
Vessenes notes that the rise of non-Bitcoin cryptocurrencies, or altcoins, is understandable, even inevitable, given the fact that the underlying Bitcoin code is open source. He says that other than taking away valuable talent from Bitcoin development, these altcoins pose no threat. “Many of these altcoins were set up for fun, for example Dogecoin,” he says, “None of them come close to Bitcoin in terms of ease of use, security, and market liquidity.”
That said, Vessenes believes that altcoins provide a means of experimentation and innovation, coming up with and testing features that Bitcoin will not ordinarily incorporate. “One feature that Bitcoin has implemented is that of multi-party transactions, where more than one person can sign off on a transaction.” he says, “This feature was put to a vote among miners, and was passed with a majority. As can be seen, innovations can and do filter into the main Bitcoin system.”
Improving economic access of the less privileged
One factor behind Bitcoin’s rapid rise has been its use in developing economies, where monetary systems are unreliable, yet tech has advanced enough for most to own mobile phones. “Bitcoin gives underprivileged people financial inclusion, allowing them to access the global economy,” he claims, “Also the security and pseudonymity it provides enables users to trade privately among themselves. This trend of Bitcoin adoption by developing economies is set to continue as tech gets ever more widespread.”
Confidence in Bitcoin to remain despite Mt. Gox bankruptcy
Vessenses acknowledges that the recent Mt.Gox bankruptcy has dented peoples’ confidence by resulting in tangible losses for many. “That to me is a tragedy, and my heart goes out to all who lost money in Mt.Gox,” he says.
However, there’s a silver lining in all this, according to Vessenes. “This (Mt.Gox) episode is likely to encourage innovation in terms of security and verification, as businesses are aware that this cannot be allowed to happen again if Bitcoin is to be seen as a legitimate currency. I foresee user confidence to recover quickly, especially since Bitcoin’s underlying algorithms and protocols are sound and uncompromised.”
Volatility a temporary phase
The recent phase of price volatility, following an exponential growth period in December, has predictably engendered an apprehensive attitude in the public towards Bitcoin. However, Vessenes reassures that this is not as bad as people make it out to be. “Stock and bond prices fluctuate all the time, as with Bitcoin. When Bitcoin becomes more widespread, when arbitrage reduces price differentials among exchanges, this will result in a stabilisation of prices,” he says.
Finally, many have argued that Bitcoin’s limited supply, capped at 21 million, will result in mass deflation, where users will hoard Bitcoins in the hope that prices will rise. Vessenes counters that this problem is not one people should worry about, given that only slightly more than half of the total amounts have been mined. “Bitcoin’s limited supply will only become more of a problem as the limit is reached. Since the rate of Bitcoin production via mining is fixed, the problem should become apparent only after 2020 or so,” he concludes.