United States Senator Joe Manchin
Dear Senator Manchin:
I am a member of The Bitcoin Association, an industry group focused on Bitcoin and related technologies.
Thank you for taking the time to express your concerns regarding Bitcoin. Bitcoin and crypto-currencies in general represent a new, but exciting technology. We are encouraged and applaud anyone’s pro-active attempt to understand this new technology in their role as the chosen representative of constituents and the American people in general.
Bitcoin is a communications standard that simply facilitates the distribution of an asset ledger across a network. It is a revolutionary technology that, when applied properly, can provide us with improved transparency and fairness in our economy. Before the invention of the internet,our communication structures were centralized, cumbersome and inefficient. The internet has decentralized the sharing of information. Now, instead of mailing a handwritten letter to a destination around the world and waiting up to four weeks for a response, we can perform this same action in seconds via email and the Internet. This new technology has been incorporated into every aspect of our economy creating new innovative American companies such as Google and Amazon, robust job growth, American economic growth and a higher standard of living for all Americans. I’d ask you to please Imagine what the world would be like today without this technology.
As the internet is more than just email, Bitcoin is more than just a currency. The bitcoin distributed trusted ledger can be applied to any centralized source of data. The result is a more stable, secure, open and fair information system. Just as the case with the invention of the internet in the 1990s, no one knows the full extent of the positive benefits we as a society will enjoy from the application of this new technology. One example could involve the largest private employer in your own home state of West Virginia, Wal-Mart. Wal-Mart’s competitive strengths include its extremely efficient logistical systems facilitating the competitive pricing of goods and robust profits in a hyper competitive industry. Wal-Mart incorporating Bitcoin technology by accepting it as a medium of exchange could reduce retail transaction costs by up to 3% of their entire sales total. Wal-Mart incorporating bitcoin into its supply chain could reduce supply chain transaction costs and logistical friction creating further savings. The savings will boost Wal-Mart profits allowing them to concentrate on what they do best, sourcing and selling great products. Not managing their banking costs.
In your letter to federal regulators you highlight some of the risks of using bitcoin as a currency. You note that the price has been unstable and disruptive to our economy. Much of the price instability has to do with the lack of liquid bitcoin exchanges. We agree that bitcoin has evolved to be an integral part of the US and global economy and therefore requires the establishment of more reliable exchanges. This is why we view the efforts of Benjamin M. Lawsky, New York State Superintendent of Financial Services in providing more clarity to those entrepreneurs who want to create jobs, with great interest. We believe this clarity will open the door for the establishment of large, liquid and reliable bitcoin exchanges in the USA. US based bitcoin exchanges not only may help solve your concerns about price fluctuations but they may also create new job growth and economic growth in the America.
You expressed concerns regarding bitcoin facilitating illegal activity. These are concerns everyone shares and we, lawmakers, regulators and industry, need to address them together. Regulatory framework can be put in place that balances the risk of bitcoin use in illegal activities while maximizing the legitimate economic growth we are already enjoying from bitcoin. Already the USA is home to some of the largest and most well respected bitcoin companies in the world such as Bitpay, the largest bitcoin payment processing company located in Atlanta, Georgia and Coinbase, one of the world’s largest online wallet providers and online marketplaces located in San Francisco, California. These companies are creating new jobs and real economic growth and will continue to do so in the future. Bitcoin companies may be the world’s future “Googles” and “Amazons”, and they are American companies leading the growth of the global bitcoin economy.
Your concern about the recent failure of Mt. Gox is valid. We, as an industry share your concerns. Before our parents and children are willing to use Bitcoin, they must be sure that they can trust it. We as an industry understand and agree with those concerned about this. The entire Bitcoin and Crypto ideals resolve around transparency and trust. The failure of Mt. Gox, in the same manneras the shut down of Silk Road, represents a milestone transition from the innovator to the early adopter stage of Bitcoin adoption. If this transition is to be successful, we as an industry understand that transparency and trust must play a key role in our process.
Most individuals and institutions in the bitcoin economy have exemplified the highest level of integrity and transparency and a notable list of industry leaders were active in making statements about transparency in the wake of the Mt. Gox shutdown.
Please hear us clearly Senator. We share some of your concerns. Many of your concerns need to be addressed and resolved if this incredible technology and the promise it represents is to thrive and prosper. It is prudent to pro-actively address them. Working together lawmakers, regulators and industry can and will find solutions to these challenges. We are looking forward to collaborating with you in the creation of a common sense regulatory architecture that enables innovation while at the same protecting the public.
Founding Member and Member of the Government Outreach Committee
Founding Member, Bitcoin Association