As part of the Digital Currency Council’s Continuing Educationpartnership with Inside Bitcoins, the DCC’s Director of Curriculum, Dan McArdle, has had the opportunity to interview the thought leaders that will be speaking at Inside Bitcoins Singapore on January 29-30. Today, we share insights from David Namdar, Founder and Head of Trading at SolidX Partners.
Dan: Tell us a little about your background in Bitcoin and Digital Currencies, and how and why you got involved?
David: I first encountered Bitcoin in 2010, when I saw some online chatter about this new digital money. At the time, it was trading around 32 cents. I tried to find ways to get some Bitcoin for free online, but the thought of actually buying any of the digital money didn’t cross my mind. It popped back on my radar in mid-2011, during Bitcoin’s run up to $30; it was touted as the world’s fastest gaining currency. That was when I started to see the possibility of fiat money losing its credibility and the appeal of a digital currency with limited supply and no central bank.
Dan: What excites you the most about the long-term prospects for Bitcoin and decentralizing technologies in general?
David: So many things are said about what Bitcoin may be, what it is today, and how it needs to be characterized going forward. I get very excited about the success it already has had, and how much financial and intellectual capital has entered the space. As many others have said, Bitcoin was built for the internet, and if the concept had been around 20 years earlier it would have already been integrated into the very fabric of the internet we know today. Long term, I see Bitcoin maintaining a place as the backbone of financial payments on a global level. And to quote Johnston’s Law, everything that can become decentralized will become decentralized.
Dan: What worries you the most about getting there? What is the biggest challenge to success?
David: As with most things in life and business, timing. Everything sustainable tends to develop slowly, and then all of a sudden that innovation is ubiquitous. It’s very easy for expectations and imaginations to run wild with the possibilities that this innovation will create for the future. But I think it’s going to take a lot of patience given that it has the ability to disrupt many entrenched businesses. Many of the Bitcoin 2.0 and other concepts that are being developed today remind me of the internet boom in the 90s. And while there were many great concepts that were introduced then, many of the business models weren’t viable until the global internet base was 10 times the size. It could very well be that many of the blockchain based innovations today are not viable with an ecosystem of 5-10 million users, or even 25 million. But once the initial applications become more pervasive, that should pave the way for the success of many additional decentralized applications.
Dan: People often say that the Bitcoin ecosystem today is like the early internet. Do you think that’s a sensible analogy? If so, what stage would you say we’re in relative to development of the internet?
David: The most common thing I hear is people pinpointing a year, saying we are in 1992 or 1995, and touting comparisons of venture capital raised by Bitcoin companies versus internet startups in a particular year. It’s a different funding environment now and I think it’s better to focus on user adoption. As a protocol, I think Bitcoin holds great promise similar to http and smtp. But it is by no means guaranteed that the Bitcoin protocol will beat out every other blockchain based innovation.
Dan: Bitcoin and Blockchain technologies in general are thought to have applications in the so-called “plumbing” of finance; e.g., settlement and clearing systems. Is there interest in this from Wall St. yet? How long a process will it be to integrate these completely new technologies into the existing mechanizations of finance?
David: Except for high frequency traders, Wall Street moves very slow when it comes to adopting new technologies or veering away from tried-and-true methodologies. Settlement and clearing systems are built on heavily invested architecture, and there has been little reason to invest in improvements or change course. Many of the biggest banks around the world, however, have taken notice of the Blockchain, and are doing diligence to figure out how existing systems may be disrupted. I think we will start to see more of them publicly disclose that they are looking into Blockchain technologies the same way we’ve started to hear more comments from the payment processors like Visa and Mastercard. And many of the other banks will continue to tinker with it behind the scenes.
Dan: How can we in the Digital Currency profession help Bitcoin adoption in general? How do we educate the public and communicate the benefits to potential new users?
David: Stay the course and continue to educate. Patience and helping people understand this technology and its potential are of utmost importance, since this new technology is unlike anything about which individuals are accustomed; people need to unlearn or relearn things that they thought they knew, an example of which is how currencies work. Opening their minds without force-feeding or selling its benefits too hard will pay the greatest dividends. Looking back on the thousands of conversations I had last year about digital currency, I spent most of the discussion explaining some of the concerns around regulatory issues, security, and Mt Gox. But I tried to leave every conversation having planted a seed of interest and curiosity about where things can go.
Dan: David, thank you very much for your time, insight and support of the Digital Currency Council.