He points our that “after the financial crisis, the prevailing wisdom was that most financial innovations, like derivatives, were dangerous.”
However, “Bitcoin has proved to be a financial platform that follows in the tradition of the Internet, empowering people to interact directly…and providing a platform for entrepreneurs to innovate.”
He makes an interesting comparison of bitcoin, the protocol on which Bitcoin the digital currency is based, to the protocol for email or SMTP (Simple Mail Transfer Protocol). SMTP allowed users to communicate directly and faster for a fraction of the cost. There was no longer the need for buying a stamp and relying on the postal service.
The Email for Money
He points out that the initial benefit is easily seen in the case of international transfers where fees can run up to 8%. With Bitcoin these transfers can take place almost instantaneously and with no need for the high-priced middle men.
Need to Limit Government Regulation
While international transfers make clear an early implementation, it is only the beginning.
However for Bitcoin to grow, Mr. Beckerman urges that government allow this protocol to evolve as it did with the early Internet. “We have to strike the right balance between helpful rules that protect and sustain progress and those that will stifle innovation and economic growth.”
We have to strike the right balance between helpful rules that protect and sustain progress and those that will stifle innovation and economic growth.
The result of over-zealous regulation would have tragic consequences especially given the fact that the industry is poised for explosive growth.
Mr Beckerman notes that “it is essential that policy makers give careful consideration to a balanced approach when determining the most effective regulatory solutions for the platform…and not inadvertently stifle the growth and innovation of the service we seek to regulate.”