By Wolfgang Koester, CEO of FiREapps
Does the recent focus on Bitcoin indicate that you consider it a currency?
No I don't, I think why some people might think it's a currency to the point of some sort of size to it but the reality is I've been talking to a lot of corporate CEOs and CFOs as well the treasury Department and none of them are really except for some marketing gimmicks are really looking at Bitcoin as a currency that they're going to do business in. There's three reasons why, first the Federal Reserve itself will end up coming out with a digital currency and that's what they're waiting on and other governments was well. Secondly there's a Senate Bill 1241 that's been discussed for over two hours on November 28th very recently where they're looking to change is the definition of financial institutions and what that would do if they get what they’re looking to get, which is pretty likely, would actually criminalized Bitcoin and would make the liquidity rather questionable. The third part is the taxation which the governments would implement to fight bitcoin.
What would be the process of criminalizing the usage of bitcoin?
Well it would do that by changing the definition of what is a financial institution and what are they allowed to do it so how transparent do they have to be and quite frankly the whole thing on bitcoin as you well know it's based on a blockchain technology, one of many, and that blockchain technology that actually hides who's doing to transactions and the United States Government as well as many other governments said that's not acceptable.
What’s the chance the Federal Reserve comes out with its own digital currency?
So what I believe is happening over the last five to ten years since 2008 is that the people who started the cryptocurrencies really looked at an inefficiency in the market and I believe they were right. The inefficiency is twofold, one, it take two days on average to move from one count to another and two it's pretty expensive. So what they're trying to achieve as a currency that is digital an immediate, like credit cards, as well as some of that are not expensive. These inefficiencies need to be embraced by the government and they are. Interesting enough is that Putin came out and stated that they will issue a Crypto-Ruble in January of next year and so this is pretty iminent. The fact is at the end of the day the blockchain can actually be used quite the opposite way a Bitcoin is being used right now. One of the two reasons that Putin want to do this is because he wants to gain better visibility into all transactions related to the Ruble and United States will end up doing the same thing.
Blockchain will give government more visibility into transactions?
The way the blockchain is shaping out and the way governments are interested it that's what it looks like moving forward. If you look back at some of the work has already been done in the Washington on this with dual ledger technology it absolutely confirms that. So the way I envision it is that it's kind of like the Euro for when the Euro came out. You still had for a while the Deutschmark and French francs and slowly but surely they disappeared and now you can't use the Deutschmark at all anymore in Germany but you can use euros. I anticipate this to be very similar and it will take time. It will not be an immediate digital dollars is here and therefore paper currencies are gone but it's definitely going in that direction. If you think about the way we transact today, I have dollars in my wallet but I hardly ever use them because I always use my credit card and other payment methods. This is the same it's going to be better, quicker and faster yet very controlled. The reason the Federal Reserve will not come out this in January because they're going to have to build a very secure blockchain that everybody trust that cannot be broken into.
How do major retailers feel about the blockchain and Bitcoin?
Well I can’t speak for them all but I think in general have the belief that digital currency will ask to be good for them and it would help him transact faster and cheaper and yet they do realize that it requires more automation on their part as well. So as is digital currencies are coming abroad and all the sudden they don't have manual processes that allow them to spend two days of settling currencies it's going to be immediate so they're looking at what the company needs to do to be ready for this and how to automate these processes which end up streams lining liquidity. So it’s actually going to be embraced by them and I haven’t heard anything negative about digital currencies, but I am hearing that bitcoin is just too volatile to get involved in from a true main means.
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