At the Blockchain Venture Summit hosted by Bitrazzi (a subsidiary of Turkey’s Webrazzi) this morning, Bobby Lee delivered some food for thought to a packed room of delegates and thousands more online via the live stream. Here’s what he had to say on the concept of ownership.
On Bitcoin and Digital Currencies
Over the last seven years I’ve had a lot of time to think about why [Bitcoin] is different… it comes down to ownership. Today, ownership is by title. For the most part, your personal assets… it’s actually all owned by you, by title, meaning it’s…tied to your ID.
Lee talked about ownership in terms of three concepts: physical, identity and information. Physical ownership refers to your clothes, your phone etc. and is the earliest form of ownership. But the larger things in our lives – houses, cars and money – ownership is based on identity, and this involves a third party. It is here, Lee believes, that problems begin, as the third party has control and therefore a say in ownership. He gave the example of the financial crisis in Cyprus several years ago, when the government announced plans to take 20% of the money owned by people with more than $100,000 dollars in the bank, causing chaos on the streets and huge queues outside banks. As with hyper-inflation, the value and therefore the ownership of your money is controlled by a third party, and this means that your money is not truly yours.
Ownership by Information
Lee then went on to talk about Bitcoin. Instead of trusting the notional concept of value, Bitcoin is about trusting mathematics, that “one plus one will always equal two.” Bitcoin is global, it isn’t identity-based, and so ownership is determined through information; a private key that you generate yourself and store yourself on your own device, without the need for a third party. It isn’t backed by an asset class; the value is in its qualities: the limited supply of 21,000,000 Bitcoins, the fact that it’s global and borderless, and that it isn’t tied to identity, meaning that ownership is controlled by you and you alone. It is this that makes Bitcoin such an attractive prospect for many. There are a lot of third parties involved with regulation, purchase, payment processing etc. When you own Bitcoin, you own something you generated (a private key) on your device. Nobody certifies your ownership. You don’t need to prove it to anyone by showing the private key. You just make the transaction happen.
Q&A With Bobby Lee
There was some time for a few questions at the end of his presentation (paraphrased):
Q: Why do you think China banned crypto rather than regulating it?
A: Because of the ICO craze in the summer of 2017. China were about to formally regulate crypto but the mood changed around May/June 2017 because of this craze.
The second question came from Arda Kutsal, CEO of the host, Webrazzi.
Q: What do you think will happen in terms of the relationship between crypto and central banks?
A: Several countries are looking into central bank-issued crypto at the moment, but do they want them to be anoymous or tied to identity? If they are tied to identity, then account numbers have to be assigned and approved. If this happens, then again the third party owns the money, so what’s the point? China and other countries have been thinking about this. But if they want to produce a properly anonymous currency with the benefits that so many currently enjoy, why not just use an existing one such as Bitcoin?
Q: Do you think that governments will give up on Anti-Money Laundering (AML) / Know-Your-Customer (KYC)?
A: Money laundering is illegal, but maybe this shouldn’t be the case. Why is it illegal? Governments used to have control over assets, but in the future when people can give each other money to each other just by using QR codes, is AML enforceable? And if it isn’t, shouldn’t governments just let it go?
Q: Do you think blockchain and crypto will bypass interest rates in the financial system?
A: It’s a scam. Banks can offer interest because they can just print more money. You can’t have interest and insurance together without issues. Whereas a limited supply, an asset with no third party, will challenge the system. It might take 20 years, but central banks will move to crypto as a store of value, rather than fiat.
Q: What about tax avoidance?
A: I’m pro government taxation. Governments need resources to enforce rules and tax is a good way for them to get these resources. Tax avoidance is too easy with crypto, so there needs to be a change in system whereby tax is charged at the point of sale.
You can follow the rest of the Blockchain Venture Summit by live stream here. There are some fantastic speakers lined up for the rest of the day.