Alec Ross, BitCoin Q&A

For four years, Alec Ross served as Senior Advisor for Innovation to the Secretary of State, a role created for him by Hillary Clinton to maximize the potential of technology and innovation in service of America’s diplomatic goals and stewarding the Secretary of State’s 21st Century Statecraft agenda. In this role, Ross advanced the State Department’s interests on a range of issues from Internet Freedom to disaster response to responding to regional conflicts. Previously, Ross served as Convener for the Technology, Media & Telecommunications Policy Committee on Barack Obama’s 2008 presidential campaign and served on the Obama-Biden Presidential Transition Team.

1) Why is BitCoin so popular? Why would anyone use a payment network based on an imaginary currency?

BitCoin is popular in part because people want to be able to bypass the middleman. That middleman could be a government regulator. It could be a financial services company that is charging 2% per transaction. What BitCoin allows is payment without the middleman.

2) Can the use or popularity of BitCoin cause economic problems? Or could BitCoins ever replace conventional money?
I think of BitCoin as just one cryptocurrency. While traditional government-backed currencies will remain the dominant currency system, I think it is only a matter of time before the total value of cryptocurrencies in circulation goes from $10 billion to $100 billion, with or without BitCoin.

3) Your advice to ecommerce companies: Should they accept BitCoins? Why or why not?
BitCoin is not well-suited to everyday transactions but there is enough liquidity in the market to allow for quick BitCoin to traditional currency conversation so that there is no immediate harm in accepting BitCoin. If you want to hold BitCoin, then you should do so thinking of it as an investment, rather than as a traditional, stable currency.

4) There is a debate regarding Bitcoins anonymity. Some say it is a strength, while others say it is a weakness. Where do you weigh in?
Anonymity has helped propel BitCoin to $10 billion in circulation but in order for its value to go north of $25 billion then I think that governments are going to demand a level of transparency and compliance with traditional financial regulations that won’t allow for total anonymity. There is only so much control government can exert on a network-based currency like BitCoin, but if you have governments cracking down on it one can expect its value to drop. 

5) What about cyber security issues? Should we be worried about Bitcoin being hacked?
Anything made up of code can be hacked. That said, I think that virtual wallets and trading platforms are actually more vulnerable than BitCoin itself.

6) Should our government be worried about BitCoin? What about it would be worrisome and why/why not?
Our government should seek to understand cryptocurrencies like BitCoin before worrying. Step one is to get educated. 

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