The day is coming when you won't need a bank account
14 June 2021
Opinion: Alex Sims writes about Bitcoin 2021 and how growth of crypto is confounding critics and even NZ’s Reserve Bank is investigating its own digital currency.
Last weekend saw Miami host the Bitcoin 2021 conference. While we don’t know the exact numbers of attendees, more than 12,000 tickets were sold. The queue to get in on the first day stretched for over a mile. Not bad for a conference, especially in the time of Covid-19.
Crypto/blockchain conferences have traditionally been the preserve of young enthusiastic tee-shirt wearing males, with the occasional grey beard and a handful of women. However, as crypto becomes increasingly mainstream, audiences are changing, and this conference was no exception. Wall Street financiers and others from traditional finance backgrounds were also notably in attendance.
Attitudes from the traditional financial world towards bitcoin and other cryptocurrencies have certainly shifted in recent years, thus large numbers at a crypto conference are not unexpected.
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In September 2017, Jamie Dimon, chief executive of JP Morgan Chase, said he would ‘fire a trader in a second’ for trading in bitcoin.
Fast forward and JP Morgan Chase, still with Dimon at the helm, is preparing to offer bitcoin to certain clients. Bitcoin is now regarded as a new asset class, and increasingly it will be seen as an integral part of a balanced portfolio.
Other examples of crypto going mainstream include Coinbase, a cryptocurrency exchange, which was listed on the Nasdaq in April. Coinbase’s shares are trading above US$200 per share and its market cap is over $55 billion.
We don’t need the banks anymore. We don’t need the financial institutions that we have today
As with any conference, who is speaking and who is not speaks volumes. Speakers included billionaire Jack Dorsey, chief executive of Twitter and Square, and Nick Szabo, one of the first to articulate what are now called smart contracts.
Notably absent from the speaker line up was Elon Musk, whose anti-Bitcoin tweets and media appearances in May (only months after his electric car making company Tesla announced it had bought $1.5 billion worth of the digital currency) have not amused many in the crypto world or financial regulators.
To be sure, there was hype. Cameron Winklevoss, most famous for successfully suing, with his twin brother, Mark Zuckerberg over the creation of Facebook, stated, “If you own a Bitcoin today, you will be a millionaire in the future. For sure. Congratulations.”
Dorsey said that if he was not involved in Twitter and Square, he would spend his time developing Bitcoin.
Despite Bitcoin maximalists believing it is the one and only cryptocurrency and blockchain, that view is not universally shared. And this showed as the conference was not limited exclusively to Bitcoin. Other blockchains were discussed including Ethereum and the burgeoning field of DeFi (decentralised finance).
And no conference concerning blockchain would be complete without a discussion of NFTs (non-fungible tokens). While much of the recent interest in NFTs has fallen as prices of NFT artworks have tumbled, NFTs as an area will only grow and promise to transform many industries.
Bitcoin 2021 shows bitcoin is no longer obscure internet money. Interest in bitcoin and cryptocurrencies in general is not going away, despite the price of bitcoin falling before and during the conference. Indeed, on balance, the drop in the price of bitcoin is not a bad thing. The rapid increase in the price of bitcoin earlier in the year and during 2017 saw rampant speculation, which often ends in tears.
If I were not at Square or Twitter, I’d be working on bitcoin. If it needed more help than Square and Twitter, I would leave them for bitcoin.
While bitcoin adoption is spreading, it is unlikely to become the main currency for everyday payments, due to the cost of sending it, transaction times, energy use and tax treatment.
However, cryptocurrencies demonstrate the limitations of our current payment and banking systems. That is why most central banks including New Zealand’s Reserve Bank are researching creating their own versions: CBDCs (central bank digital currencies).
Some have even started trialling their own CBDCs: China’s digital yuan being the most high profile (although it doesn’t use blockchain). Another spur to the roll-out of CBDCs is Diem, which Facebook is heavily involved in.
This, the future of payments, is a fast-moving area. The days of people requiring bank accounts with a commercial bank are not assured.
Alex Sims is an Associate Professor in the Department of Commercial Law in the Business School.
This article reflects the opinion of the author and not necessarily the views of the University of Auckland.
Used with permission from The day is coming when you will not need a bank account 14 June 2021.
Alison Sims | Research Communications Editor
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