Alan Safahi, CEO of Zip Zap, told me that it was important to have a conference in Silicon Valley because SV is becoming the epicenter of virtual currencies. He told me he packed up his things and moved them along with his wife to SV from Orange County. He told me that he explained to his wife, who was reluctant about the move, that if they had lived during the time of the expanding Roman Empire that they would have wanted to live in Rome and that for someone in payment systems and virtual currencies, like Zip Zap is, the place to be is Silicon Valley.
The most important vibe I am picking up at the event is that there are many money players who want to get Bitcoin up and running and are willing to play by government rules, that is, register all accounts they open and take down the name, DOB and social security number of Bitcoin buyers and sellers.
In this way, Bitcoin could survive, but the watchful eye of government will be there. Many of these players argue that it is impossible to battle the government, Safhai told me that "It is a period to build the baby and not send it to war [against the government.]"
One major player told me that Mt. Gox, which recently had accounts seized in the US by the government, made a serious mistake by not following the guidelines that were issued by Treasury and by failing to register as a money exchange in the US.
Another player, who is something of a rock star in the Bitcoin world and wanted to remain anonymous, told me that anyone operating on Silk Road, the underground drug selling market on the internet that transacts through bitcoins, was crazy. He told me that it is very easy to track bitcoins and eventually the government will track down the major players on Silk Road and arrest them.
Still others at the conference were more defiant. At one booth, Bitcoins were being sold for cash with no ID checks. Walk up to the booth lay down your money and buy your bitcoins. The money was piling up.
|Those are mostly hundreds and fifties on the floor.|
The less "corporate," the more renegade seemed to be the operators and the more willing these operators seemed to be willing to challenge the government. One operator who was setting up an exchange told me he didn't have the money to register as an exchange with the government but planned to start operating anyway. One corporate type said to me that virtual currencies are in their infancy and that lawsuits, fighting and jail time for some will occur before the crypto-currency world becomes more defined.
My take at this point is that the corporate types are going to give legitimacy to the crypto-currency world. They have already formed an association, the Bitcoin Foundation. They are going to be hiring lawyers and lobbyists. I overheard Patrick Murck, the general counsel of the foundation, say that he is in a major hiring mode and that he plans to hire a combination of 6 lawyers and lobbyists in the near future.
This, of course, will mean that the key players plan to set up regulations in cahoots with government. No doubt, as always, they will attempt to set up regs that will benefit them and make it difficult for competitors, but Bitcoins is a slippery animal and it will be difficult for these established operators to anticipate the best methods to regulate virtual currencies. The renegades may have a chance. Indeed, these established operators may provide cover for the more renegade operators, who will be attempting to find workarounds to government regs. The clueless regulators may think they are regulating Bitcoin but be far behind what the renegades have developed. It will be a battle and it is not clear who will win.
Indeed, it is not even clear which virtual currency will end up on top. I spent quite a bit of time talking to Chris Larsen, CEO of Ripple. Ripple is an open payment system.
Ripple users can trade any currency for another without requiring any broker or third-party to facilitate the trades. The process is simple: users submit buy/sell prices to the network and the Ripple protocol automatically finds the best available match and completes the trade.
Ripple is also in the early stages of launching its own virtual currency XRP. They have the money and brains behind them, so it will make sense to keep an eye on them.
Of note,the television network RT is way ahead of the mainstream US networks, they have a full television crew presence. I had the opportunity to spend some time with Perianne Boring (the best James Bond name in the real world) who is host of the new RT show, Prime Interest, which is being produced by former EPJ contributor, Bob English.
|Robert Wenzel and Perianne Boring. Perianne says she prefers my "nerdy glasses look."|