Virtual currency Bitcoin is approaching a tipping point, the Institute of Directors heard today at its annual convention
Speaking at the Institute of Directors’ annual convention in the Royal Albert Hall, Jon Matonis, executive director of the Bitcoin Foundation claimed that “When it clicks, we’re going to reach an inflection point and Bitcoin will become the new gold.” He claimed the currency was an “epic” revolution analogous to the printing press.
The Bitcoin Foundation is a lobbying group founded in 2012 that is aiming to “standardise, protect and promote” the use of bitcoin, but Mr Matonis claimed that countries such as Argentina were already adopting virtual currencies widely as trust in government declined and inflation rates increased.
“Half of the world’s population is unbanked,” said Mr Matonis. “They can’t even sign up for an online university course because they don’t have a credit card. When they try to better themselves they run into these payment barriers.”
While Bitcoin has issued $6bn worth of currency since it launched five years ago, it has both struggled to attract mainstream adoption and also increasingly come to the attention of regulators.
Mr Matonis said central banks could regulate people converting Bitcoin to other currencies, but could not currently regulate transactions conducted entirely in Bitcoin. He said users retained the choice to maintain privacy. “Money doesn’t do bad things, people do bad things,” he said, in answer to a question about whether he felt guilt over what could be bought online with the currency. He described Bitcoin as “a non political monetary unit that transcends borders.”
“In five short years Bitcoin has issued 12m units valued at $6bn,” said Mr Matonis. “No other virtual currency has ever done that in the history of modern economics. That demonstrates that we don’t need governments to provide our currency. We don’t need kings to coin our money. The myth of legal tender has been shattered. With apologies to the Chancellor, the emperor has no clothes.”
He claimed that Bitcoin’s success was based on the fact that it was supported by the trust of users rather than the authority of a state. “If we’re honest with ourselves all money is based on faith, all the way from gold to pounds sterling. We accept it and store it because we have a belief that someone else will accept it in transactional trades. If you look at gold less than 5pc is its intrinsic value for gold, for jewellery. The other 95pc is its value in monetary exchange.”
Mr Matonis said that while human nature meant many remained sceptical about trusting Bitcoin because it was not backed by government, the new currency would endure. “Bitcoin comes with something far more important and profound – it comes with market-based legitimacy. When you can avoid the intermediary and rely on distributed trust, vast new opportunities open up.”