Davis Polk Financial Institutions Group associate Reuben Grinberg was recently interviewed on Bloomberg Television’s “Street Smart.” In “Bitcoin Needs Regulations to Succeed,” Grinberg discusses the evolution of Bitcoin and whether it is here to stay.
See the link here (text below)
Read Grinberg’s latest Bitcoin post on Davis Polk’s Capital and Prudential Standards Blog: “The Failure of Mt. Gox and Other Recent Bitcoin Catastrophes: Why Banks Should Care.”
The Text of Grinberg’s talk:
Walk us through.
Qwest a long time ago, a group or people who were libertarian did not like control by the government.
In any shape or form.
There was an e-mail list and a lot of what they discussed was technical ways of getting around government control and some familiar names, bram cohen, who created bitcoin it — bit torrent.
One of the things they discussed in an anarchist is — society without government control, howdy have money?
There was an idea and a few years later, satoshi okamoto, a fictional character no one knows who he is, was actually able to implement it.
It was called bitcoin.
He releases software into the internet and it exploded from there.
Qwest what is interesting, and you cite does, back in 2011, there was a group of people trying to contribute to wikileaks.
Paypal and the u.s. government caught on and basically shut it down.
Would he see them in some ways this is much — as much of a political movement as anything else?
Cuts earlier cap — over — earlier on, if you going to the user form, you can see people with views quite outside the mainstream.
People who think the federal reserve should not exist and no one should pay taxes.
It has grown up since then.
The department of financial services recently had a hearing.
The display of witnesses were nothing like the people originally involved in bitcoin in the beginning.
These were all investors and not the doors with people with millions of dollars who have been around the block in terms of the traditional financial system.
It has grown up.
It does have some of those people still involved who are extreme in different ways and outside the mainstream.
There — they are a smaller portion of bitcoin.
What is the most important thing bitcoin can have happened to it?
Does it need to be ultimately regulated?
It depends on what you mean by succeed.
Most people would say success is acceptance into the mainstream.
For that to happen, you need regulation.
We had mount blowup recently.
What that shows is you need to have standards to make sure that exchange — the bitcoins are doing in a way that is secure.
Almost every single exchange or wallet that has existed has blown up, has been hacked, or entrepreneurs have as — of scone did.
There are new ones focusing on security and going through great lengths to work with regulators in the u.s.. i hope those succeed.
I’m looking forward to more regulation.
At the end of the day, if you’re going to secure a volatility problem and the currency has gone from $100 to $1200, if you will cure the volatility, you need to have more people using it and people need to feel safe and secure.
How can they feel safe and secure if there is no actual radiation?
That is right.
A lot of factors go into it, being volatile is one.
Recently, there was indication from china the government would crack down and not allow people to trade bitcoin.
There was a huge selloff and the price crash.
Whenever you have pronouncements from different governments that seem like they’re saying, you cannot do this, there will be a lot of fluctuation.
As we get more right with — regulation, it will help volatility but i do not think it will ever go away.
If you look at gold, where there is all the certainty of the world about the legal — legal status, it is volatile.
The coin is meant to be similar.
It is meant to be for synthetic commodity, limited in amount.
Gold is a limited amount.
More trickling out each year.
Yet, it is fairly volatile.
Having regulation will help volatility.
I wonder we have this as the queen’s dark days.
I am one of the people outside the mainstream.
I would have thought of myself that way.
I do not like to pay taxes.
I’m not a huge fan of the fed.
I do not need bitcoin to be excepted in the mainstream.
I’m just not one of the sheep very what is interesting is even if you define success more narrowly, which is, you do not have to have everyone using it as long as people who do not believe in the government can use it is fine, there is an artificial taxable people.
Every single exchange, every wallet, almost all them have been had.
If you think about what insurance premiums you would have to pay to make people whole, it is high.
There is an invisible tax in using bitcoin that people do not realize.
It is interesting.
Even for people who do not believe in government and did not believe regulation is good for bitcoin, the improvement that will come from more focus on this from regulatory bodies will help them.
Janet yellen talking about it.
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