TechCrunch is currently hosting its Disrupt NY 2014 conference, spiced up with a hackathon and an interesting 'battle' between 30 startups. Of course, no disruptive tech event would be complete without digital currencies, so TechCrunch obliged.
Ripple's Susan Athey and Blockchain's Peter Smith took to the stage at the event to share their thoughts on cryptocurrencies and the current state of bitcoin.
Athey cautioned against the media's incessant focus on the bitcoin exchange rate.
"I think the focus on the exchange rate is a little overrated. I mean it's fun to watch the price move around, but if I wanted to send funds to you, say, in Japan, I only care about the bitcoin exchange rate for about 10 minutes," she said. "The level of the exchange rate is really irrelevant for its use as a transaction medium."
We have heard similar statements from bitcoin execs in the past, but the focus is slowly shifting toward matters generally considered more important, such as VC-funding of bitcoin companies and the real-life applications of cryptocurrencies and block-chain technology.
Athey pointed out that even gold has a premium on top of its intrinsic value. As bitcoin has no intrinsic value, it's value is solely premium, she said, explaining:
"You can think of the number of bitcoins like a pipe of fixed dimension. If I want to put a lot of dollar value through that pipe, the exchange rate of bitcoin has to grow to accommodate that volume through the pipe. If you look at the volumes and exchange rates, they track each other reasonably closely."
She further said there were some deviations from historical trends, but it is possible to imperfectly predict the value based on the transaction volume.
Asked to comment on the demise of Mt. Gox and its effect on bitcoin, Peter Smith said the overall impact will be relatively small.
However, he also used Mt. Gox as a cautionary tale, as an example of why bitcoin startups should not centralize their operation - namely their bitcoin storage. Smith said Blockchain never takes possession of the funds, always keeps its software open source and works to decentralize trust rather than centralize it.
Smith explained that centralized exchanges are vulnerable and that almost all services that have 'centralized trust' have suffered significant security breaches and incurred losses, adding:
"If you go out and buy bitcoins on an exchange with centralized trust, you should immediately transfer these bitcoins to a service where you can manage public and private keys."
Smith went on to criticize the basic concept of centralising trust.
"I don't think that business models that take away the core value proposition of the bitcoin protocol are a good idea," he said.
The bottom line is, Smith believes startups that centralize trust are doing it wrong.
Images via TechCrunch
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
PricesRippleTechCrunchBlockchainSusan AtheyPeter Smith
$10K Test? Bitcoin Price Hits 4-Week High As Altcoins Shine
Bitcoin hit four-week highs in Asian hours but continues to underperform when compared to alternative cryptocurrencies (altcoins).
Having scaled a long-term bearish trendline, the world's largest c
DOJ Charges ICO Co-Founder With Securities Fraud
The Department of Justice has unveiled fraud charges against another co-founder of cryptocurrency startup Centra, a move that comes weeks after two other founders were arrested and charged.
Russia's Supreme Court Orders Review of Crypto Website Ban
The Supreme Court of Russia has directed a court in the city of St. Petersburg to consider an appeal against a blocked cryptocurrency information website.
According to Russian legal information sit
Quebec's Chief Scientist Denies Dismissing Crypto Concerns
Contrary to recent media reports, the Chief Scientist of Quebec has not downplayed concerns about the illicit use of cryptocurrencies, his office said.
On Thursday, several media organizations publ
Amazon Web Services launches 'blockchain templates'
Amazon.com wants to make it easier for developers to create projects based on the blockchain technology underlying bitcoin and other cryptocurrencies. The company's cloud computing division
Cloud Giant Xunlei Claims Blockchain Advance With 'ThunderChain'
Xunlei, the NASDAQ-listed cloud network provider, has launched its proprietary blockchain platform, despite ongoing class actions over an alleged initial coin offering (ICO).
At a press event in Be
Taiwan Eyes November Deadline for Bitcoin AML Regulation
Taiwan aims to formally regulate bitcoin under anti-money laundering (AML) rules before the end of the year.
According to the Taiwan Central News Agency, Chiu Tai-san, the country's minister of jus
Bitcoin Bull Trap? Not So, Says Lesser-Known Price Indicator
Is the reversal of a lesser-known bitcoin price indicator signaling a bull trap?
That's the question being asked by Twitter's more expert crypto analysts after bitcoin's rise to $8,500 this week, a