The HBS Bitcoin Club kicked off its first organised event with the Bitcoin Panel at Cyberposium 2014. The panel represented a broad cross-section of players within the Bitcoin ecosystem resulting in a good debate that was described as "off the (block)chain". Panelists included Adam Draper (Boost VC), Jeremy Allaire (Circle) and Adam Ludwin (Chain). HBS Professor Andrei Hagiu, who authored the first HBS case on Bitcoin, moderated the discussion.
We started by asking where the bigger opportunities were in Bitcoin; infrastructure, merchants or consumers. The answer: all three. The general view was that Bitcoin is still very early in its development. Adam Draper commented "Bitcoin 2.0? We aren't even at Bitcoin 0.2". Moreover, parallel development of all parts of the Bitcoin ecosystem were important for mass adoption - which at this time, panelists concurred, is more important than picking the correct part of the value chain. It was noted, however, that infrastructure businesses currently have an attractive business model, given they can be profitable from day one. In contrast, consumer applications may hold much of the value longer term.
Adam Ludwin then talked about Bitcoin as the "most interdisciplinary field out there" encompassing finance, economics, technology, government and more. It was an explicit call for MBA's who may be attracted to this type of faculty. (Aside: All three companies are hiring). Not only is Bitcoin interdisciplinary, it is truly global. The discussion shifted to the potential global applications that Bitcoin promises such as remittances. Adam Draper said the "US is the worst place that Bitcoin could have taken off because 93% of our payments are already digital." The discussion centered around how Bitcoin, or more accurately the distributed, open ledger known as the blockchain could modernise the "piping" of our financial system. Ludwin explained "If you invented money today, you would invent Bitcoin." Jeremy Allaire articulated the real power of Bitcoin as a protocol akin to HTTP for the internet. He envisioned blockchain technology being deployed to replace not only the localised national ledgers, but also the payments system that currently connect them. Allaire's vision of the future: "The cost of moving value internationally will drop to 0". (We hope so too).
We discussed briefly some other applications that could be powered by blockchain technology including smart contracts and equity raising. In fact, panelists agreed that much of what "Wall St" and law firms currently do could be disrupted by Bitcoin in some form. Regulation was also discussed briefly, with Allaire saying he was "relatively positive" on the state and engagement of regulators. He also mentioned that he viewed his own bank as his "principal regulator" given their strict adherence to the current rules. In addition, the favourite comment about Bitcoin volatility was discussed and highlighted as a major impediment to adoption.
Overall, there was immense optimism about Bitcoin and its future potential (albeit at least 5 years away). It was clear many challenges still remain - the protocol itself, consumer adoption, regulation, volatility and many more not discussed. Panelists viewed these challenges as fixable and just "opportunities to create companies" rather than existential threats to Bitcoin as we know it. They are all staking their careers on Bitcoin and left the audience a lingering question: Should we too?
-Rahil Gupta
Note:
The HBS Bitcoin Club is now an official club at HBS. We aim to be the center of everything Bitcoin at Harvard. Please get in touch with Daniel Vogel (dvogel@mba2015.hbs.edu), Hassen Abdu (habdu@mba2015.hbs.edu) or Rahil Gupta (ragupta@mba2015.hbs.edu) for further information.
We started by asking where the bigger opportunities were in Bitcoin; infrastructure, merchants or consumers. The answer: all three. The general view was that Bitcoin is still very early in its development. Adam Draper commented "Bitcoin 2.0? We aren't even at Bitcoin 0.2". Moreover, parallel development of all parts of the Bitcoin ecosystem were important for mass adoption - which at this time, panelists concurred, is more important than picking the correct part of the value chain. It was noted, however, that infrastructure businesses currently have an attractive business model, given they can be profitable from day one. In contrast, consumer applications may hold much of the value longer term.
Adam Ludwin then talked about Bitcoin as the "most interdisciplinary field out there" encompassing finance, economics, technology, government and more. It was an explicit call for MBA's who may be attracted to this type of faculty. (Aside: All three companies are hiring). Not only is Bitcoin interdisciplinary, it is truly global. The discussion shifted to the potential global applications that Bitcoin promises such as remittances. Adam Draper said the "US is the worst place that Bitcoin could have taken off because 93% of our payments are already digital." The discussion centered around how Bitcoin, or more accurately the distributed, open ledger known as the blockchain could modernise the "piping" of our financial system. Ludwin explained "If you invented money today, you would invent Bitcoin." Jeremy Allaire articulated the real power of Bitcoin as a protocol akin to HTTP for the internet. He envisioned blockchain technology being deployed to replace not only the localised national ledgers, but also the payments system that currently connect them. Allaire's vision of the future: "The cost of moving value internationally will drop to 0". (We hope so too).
We discussed briefly some other applications that could be powered by blockchain technology including smart contracts and equity raising. In fact, panelists agreed that much of what "Wall St" and law firms currently do could be disrupted by Bitcoin in some form. Regulation was also discussed briefly, with Allaire saying he was "relatively positive" on the state and engagement of regulators. He also mentioned that he viewed his own bank as his "principal regulator" given their strict adherence to the current rules. In addition, the favourite comment about Bitcoin volatility was discussed and highlighted as a major impediment to adoption.
Overall, there was immense optimism about Bitcoin and its future potential (albeit at least 5 years away). It was clear many challenges still remain - the protocol itself, consumer adoption, regulation, volatility and many more not discussed. Panelists viewed these challenges as fixable and just "opportunities to create companies" rather than existential threats to Bitcoin as we know it. They are all staking their careers on Bitcoin and left the audience a lingering question: Should we too?
-Rahil Gupta
Note:
The HBS Bitcoin Club is now an official club at HBS. We aim to be the center of everything Bitcoin at Harvard. Please get in touch with Daniel Vogel (dvogel@mba2015.hbs.edu), Hassen Abdu (habdu@mba2015.hbs.edu) or Rahil Gupta (ragupta@mba2015.hbs.edu) for further information.
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