Bitcoin Lecture Panel, Glasgow University, 30 January 2014

Lecturer: Michael Parsons (chartered accountant, banker)

Bitcoin is decentralised digital (non-fiat) currency. It is driven by a reaction to three separate developments: centralised monetary authority; diminishing financial privacy; dominant legacy infrastructure. Dominant fiat currencies traded in the bitcoin marketplace are USD and CNY. Mining difficulty has exploded in the past year, along with the bitcoin exchange rate. Bitcoin is electronically equivalent to cash or gold and can be stolen (via hacking).

Lowdown on software, payment processing options, and regulatory issues (especially regarding bitcoin exchanges).

Bitcoin is a currency, commodity, store of value and payment network – a non-political unit of account. While it may present competition to fiat currencies, it does not automatically replace them and could easily be used in tandem with them, as today. Why should the State have/enforce a monopoly on money? Fiat is debt printed out of thin air, with no limits.

UK context – The Bitcoin ecosystem would benefit from a UK regulated exchange “anchor” to provide world-class security and develop mainstream usability and acceptance. And, better to have Bitcoin exchange transfers on the inside rather than (unregulated) outside. (eBay will allow classified bitcoin sales Q1/2014.)

Lecturer: Garrick Hileman (Adam Smith Society – University of Glasgow)

Bitcoin should not be dismissed as a passing fad. But there are real risks and reasons to consider as to why Bitcoin might not take over the world. Bitcoin investors obviously have vested interests in promoting the currency's use; are bullish.

Price increase makes bitcoin look like the biggest bubble ever; cryptocurrency is the most bullish commodity market ever. And who is Satoshi Nakamoto anyway?

Brings up Wörgl's Freigeld (non-fiat démurrage currency of the 1930s), and its “death by regulation”, whereby the Austrian Central Bank succeeded in getting it shut down in 1933. Non-fiat currencies can die three ways: “death by regulation” (the least common!), death by technology (e.g. merchant tokens became obsolete; can altcoins supersede bitcoin?) and death by insufficient demand (e.g. LETS, a UK-based barter system, though that has not completely died out).

The success of dogecoin highlights how people are seeking to form an emotional connection to currency and money. Dogecoin began as a joke but jumped more than 300% in price, and has an active development community.

Another hurdle for Bitcoin is that convenience trumps anonymity/pseudo-anonymity for most consumers. It seems that few women use Bitcoin at the moment.

The ability to speed up global remittances and reduce fees is a huge plus for Bitcoin.

Bitcoin is malleable – programmable money can be reprogrammed.

Lecturer: Javier Martí (bitcoinglobalinvestments.com)

We are at the end of an economic phase, Martí refers to this as “predatory capitalism” (really corporatism). Corruption and debt crises abound; banks are insolvent. Printed money = rising inflation, shows through in costs of basic staples. Economies are collapsing. Low-quality media not informing the public.

High unemployment (for multiple reasons, technological and otherwise) is the big deal.

Bailouts transfer wealth from the working/middle classes (“the 99%”) to the rich. Much of the privileged class is over fifty years old and “technologically illiterate”.

Banking system today is very weak and no economy is immune to possible crisis.

The main strength of bitcoin as a currency/money is its limited supply - ฿21 million cap. Paul Krugman knows “nothing” about bitcoin. Bitcoin, as programmable money, has tremendous versatile utility: dozens of possibilities.

Bitcoin can be stored in one's head and is “perfect” for growing the shadow economy (aka black market, free market, underground market, System D).

Capital could flow into bitcoin from PMs?

Government threats? Propaganda “Bitcoin is evil” and associated marketing campaigns; could be banned (will that be effective or not?) with potential confiscation (probably not effective or enforceable?). A government that is broke, however, will struggle to fund enforcement of such bans or anything else.

The Bitcoin network can theoretically be “51% attacked”, likewise any blockchain-based cryptocurrency. A competing crypto or black-swan event could theoretically kill Bitcoin.

The Bitcoin network requires the Internet to function, but should the Internet or the power grid fail, we face bigger problems than merely Bitcoin's functionality.

Because Bitcoin is open source, it really does not matter who Satoshi is.

Bitcointalk and Reddit could be conceived as “information points of failure”, centralised sources of information. There are also potential technical barriers to entry for new Bitcoin users.

Price is more or less irrelevant: Bitcoin is either a good idea, or it isn't. The black market reduces the risk of bitcoin price falling to zero.