Virtual currencies (aka math-based or digital currencies or cryptocurrencies) are emerging forms and units of digital transaction, outside the realm of government regulation (so far, anyway). They usually can be transacted with virtual anonymity, and be transacted globally fairly quickly.
Infographic, adapted from Visual Capitalist, on Bitcoin
Bitcoin is the first such digital currency to gain traction. Created by a developer or group of developers named Satoshi Nakamoto (pseudonym) in 2009, today there are 11M bitcoins in circulation and the current market for Bitcoin already tops $1.5B. The currency itself is quite unique. Bitcoin are created (or “mined”) by computers completing complicated algorithms. The first to solve the algorithm and achieve the closest answer effectively claims an allocation of bitcoin. This goes on until the outer limit of 21M bitcoin are mined.
VLAB Executive Chair, Ron Chavez, welcomes the audience
VLAB is a 501(c)(3) nonprofit comprised of volunteers who pitch topic ideas that span innovation and disruptive technology and work in small teams to understand the space, identify controversies, and form an engaging panel.
Featured speaker, economist, and Stanford Business School professor Susan Athey introduces virtual currencies as an economic concept.
Professor Athey focused on four unique uses of virtual currencies as: a way to store value (especially in light of inflationary currencies); as a ledger; as a method of making anonymous transactions, and possibly as a basis for government monetary policy.
Moderator & Forbes Online Sr. Editor Kashmir Hill introduces her unique experience with Bitcoin, sushi, and cupcakes
Hill, whose work has lately focused on digital privacy took on a unique challenge in early May. She lived only on bitcoin for one week. She recapped challenges such as finding retail food locations beyond Cups and Cakes Bakery and Sake Zone sushi in SF. She recalled how things got interesting when her landlord didn’t accept rent in Bitcoin, causing Hill to have to find BTC-friendly housing for a few days.
Founder/CEO Chris Larsen (OpenCoin, Ripple) explains math-based currencies and their potential to disrupt payment processing, exchange, and currencies
Panel discusses various topics related to virtual currencies, with questions posed by Moderator Kashmir Hill
VC’s Tyler and Cameron Winklevoss commented on the scope they see for math-based currencies as a disruptor to industries such as remittance. They own approximately 1% of bitcoin in circulation, and most recently funded a Bitcoin startup called BitInstant.
Wendy Cheung of Silicon Valley Bank spoke about state and federal compliance concerns relevant to bitcoin and math-based currency startups. SV Bank currently works with a number of startup companies in this space.
Fred Ehrsam (second from left) touched on unique challenges as a startup in the space. He co-founded Coinbase after noting efficiencies of current systems as a foreign exchange trader on Wall Street. Coinbase has had to navigate through the compliance and regulatory requirements and is poised to become the leading bitcoin wallet on the market.
Audience members could text in questions that were fed to the moderator’s iPad. Kashmir selected a few to ask to the panel and noted common questions. Of these a few popular questions were—directed to the Winklevoss investors—whether their firm would ever fund a startup using Bitcoin. Other questions asked about how mining for bitcoin actually works, and yet others touched on inherent limitations of a finite curency (i.e. There will be a total of 21M bitcoin available to be mined).
You can view the video of the virtual currencies event when it is posted here.
Events in the past year have included: the Founders’ Series, Collaborative Consumption, The Future of Diagnostics
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|[photo credit J. Fuqua]|
It was a wonderful experience co-chairing the event team for the virtual currencies panel with Frank Martinez (far right). A huge thank you and recognition to event team members including Edward, Jerry, Richard, Jenny, Tony, Lisha, Chethana, Prashant, Geeta, Luca, Jeanne, Michelle, and marketing team Siejen, Chitrak, Tom, Jae and the broader VLAB community.