LAS VEGAS (5/7/14)--Bitcoin investor Steve Kirsch compared the state of digital currency--and Bitcoin specifically--to the dawn of the Internet during a Credit Union National Association Payments Roundtable presentation Tuesday in Las Vegas.
Kirsch, the principal of Cointrust, a company that claims to take "high road" in digital currency compliance, said the Bitcoin technology could have other uses besides currency, including "anything that is tradable, such as cell phone minutes."
He added that Bitcoin is adding as many as 500 merchants a day, despite concerns from regulators.
"The reality is that it is gaining momentum, but that momentum, as the regulators gain clarity, could mean we shift to a more regulated version of bitcoin," Kirsch said. "The concept of digital currency I don't think is ever going away--it's just going to change in terms of how we think of it in being compliant with laws instead of being out there in the Wild, Wild West."
In contrast to conventional currency networks, the Bitcoin network is decentralized. The network processes bitcoin transactions on a peer-to-peer basis rather than through a centralized processing system. The Bitcoin network has its own unit of value, which is called the bitcoin.
Kirsch explained that Bitcoin with a capital "B" means the software and the system; bitcoin with a lowercase "b" means the currency.
Bitcoins are mathematically generated as the computers, a procedure known as Bitcoin "mining."
The market for bitcoins is volatile, in part because the crypto-currency is not backed by any assets and is unregulated.
Recently, some credit union state regulators have warned credit unions not to deal in the bitcoin currency.
Kirsch acknowledged there are concerns with bitcoin currency and the Bitcoin network, primarily concerning safety, security and compliance. But he said reputable companies are working to address these concerns to work with regulators and financial institutions and advance the technology.
Kirsch compared the Bitcoin networks current status to the early days of the Internet. "When the Internet was created it didn't take off until somebody came up with the idea of the World Wide Web," he said. "Right now the Bitcoin is this enabling technology, and there are going to be some interesting applications. There are lot economists and experts who say it is going to fail, but they fail to account for the innovation that is going to happen."