Sunday, May 19, 2013

More on Bitcoin 2013 (Part 4)

More than one attendee has pointed out to me that after the US Treasury made the announcement that Bitcoin exchanges must comply with money exchange money laundering rules that China seems to have started promoting Bitcoin use, even to the point of running on national television, several times, a documentary on Bitcoin.
In addition to the up and coming crypto currencies I mentioned earlier that could be competitors to Bitcoin, I heard several in the know people bring up LiteCoin and PPcoin.
One attendee tells me that Silicon Valley Bank has stopped accepting applications from new Bitcoin exchanges. This may be good news for CoinBase, which already has its foot in the SVB door, but another indication of how the shadow of government is casting a fear on banks willingness to work with exchanges. It truly is the weak spot of Bitcoin, that is, the actual exchange point between Bitcoin and fiat currency. Prior to attending this conference, I gave the edge to government, but at this conference I see there is going to be big money bringing in lawyers and lobbyists that will give Bitcoin breathing room. These big money types will play footsie with Washington D.C. and agree to register the name and other identifying information of exchange users, but as I said earlier this may well provide cover for those operating beyond the watchful eye of government. The government types may think they are regulating Bitcoin and have no awareness of how much is going on beyond their control.

It will be a cat and mouse game. As I reported earlier CEO Alan Safahi of Zip Zap told me, there will be some arrests, but he also said the cat is out of the bag. Turr Demeester of MacroTrends, seemed to concur and said that a thousand heads will emerge and the government won't be able to cut them all off. Peter Surda was reluctant to declare the government impotent and said there is a possibility that government regulation could be strong enough to suffocate what I call the second tier underground Bitcoin operators.
One of the big games at the conference has been the guessing game as to who the undercover government agents are in the crowd. Trace Mayer's father identified a middle age woman who sat alone and didn't meet the demographic of attendees at all.

I ran into one guy, a long haired Asian, who came up to me and said, "So did you write anything up about Mt. Gox when their money was seized?". This alone was a bit unusual since the few people who saw my name tag usually introduced themselves as EPJ readers before saying anything else. We talked for a minute and then he asked where he could read what I write, which means he wasn't even an EPJ reader. I went back to the table I was sitting at and commented to the people at my table that I just had an unusual conversation and I thought the guy might be an agent. It turned out that everyone at the table had had been separately approached by the guy. With a crowd of around a 1,000, always be suspicious of someone who appears to be systematically approaching everyone at the conference with odd questions.

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