The Blockstack Summit 2017 brought together three prominent figures in payments technology for a panel discussion on where digital currencies fit in the online economy. Balaji Srinivasan, CEO of 21, E
The Blockstack Summit 2017 brought together three prominent figures in payments technology for a panel discussion on where digital currencies fit in the online economy. Balaji Srinivasan, CEO of 21, Elizabeth Stark of Lightning Labs, and Ryan X. Charles from Yours sat down with Adamant Research Editor in Chief Tuur Demeester to examine the role of bitcoin and cryptocurrencies in payments infrastructure.
The conversation arrived at a moment of tension in the digital currency world. Bitcoin had reached record prices in recent months as altcoins carved away market share. The panelists grappled with what bitcoin's evolving position means for the broader ecosystem.
Srinivasan laid out the use cases where cryptocurrencies outperformed traditional payment systems: large transactions, small transactions, fast settlement, cross-border transfers, and machine-to-machine payments. He acknowledged that the bitcoin network has encountered high fees in recent months, which undermines the small-payment use case. But Srinivasan expected this dynamic to change as the network matures.
He pointed out a structural gap in how people handle money online. "Right now, there's a major hole on the Internet where you can go and put your credit card into a website, but most people don't put their bank account into a website to get paid," Srinivasan said. "The ability to spin up a new address and get paid very rapidly without actually setting up a bank account is something that's a major advantage with digital currency. I think that's one of the biggest advantages of it from a payments standpoint."
Stark pushed back against the idea that bitcoin makes sense for everyday purchases. "It's not that hard to buy coffee right now," she said. She framed the technology's potential in terms of enabling transactions that traditional finance can't support. "But I do believe that what these technologies and currencies will do is it'll enable use cases that weren't previously possible because you just couldn't send one cent a million times per second, for example, for a machine API call or to access a mesh network."
Charles emphasized that Yours avoids taking custody of user funds. "From our point of view, as a business, we would rather not be a custodian of our users' funds," Charles said. "That's not what we're doing. We're not a bank; we're not a payment processor. If we can not be in the business of being a custodian, we would prefer that." The company routes payments through a layer-two blockchain system, allowing transactions on behalf of users without controlling their assets.
The panelists welcomed progress on Segregated Witness, which moved closer to activation on the Bitcoin network. But they wrestled with bitcoin's constraints as a payments platform. Srinivasan separated his investment thesis from his technical assessment. "I'm still extremely bullish on bitcoin as an investment," he said. "I think as an investment and as an innovation it's still a huge thing. As a technology platform to build on top of it, it may or may not be the best thing to build on top of."
Competition from newer cryptocurrencies had broken the unified movement around bitcoin. "The network effect [around bitcoin] has been broken in the sense that you do have Ethereum coming up, you have all these other coins going up, [and] there's this explosion of coins all across the space," Srinivasan said. He saw different coins filling different roles. Zcash offers privacy protections, Ethereum enables programmable contracts, and other cryptocurrencies might emerge optimized for smaller payments.
This analysis led Srinivasan to a different conclusion about the market structure. "I think it's definitely going to be a multi-coin future." He maintained his bitcoin conviction, though. "I'm still bullish on bitcoin. I still think it's going to get to maybe even a trillion dollars, competing with gold."
Charles broke with what he called bitcoin maximalism earlier in the year, moving toward a more pluralistic view of digital assets. Stark offered a qualification: Lightning Labs remains committed to the Bitcoin network without plans to diversify.
