As talks about bitcoin and the technology underpinning the digital currency (the blockchain) continue to heat up, both in the public and private sectors, everyone who is anyone in those two spaces seems to want to give a perspective on the issue.
Now, Ed Felten — a Princeton computer science and public affairs professor, who eventually joined the FTC as chief technologist and who is now the U.S. deputy CTO for the White House — has gone public with some of his most recent thoughts about bitcoin and the policies surrounding the digital currency.
Taking a page from a book he wrote on the subject, along with some papers, Felten expresses in recent writings, which first appeared on Quora, about his thoughts on bitcoin and the value it could have for society, particularly in the areas of financial inclusion.
“Bitcoin is governed more like an open-source project. Factors like these mean that bitcoin might be able to provide value in new ways, perhaps to contribute to social and governmental goals like financial inclusion,” he wrote, recognizing that there are still plenty of concerns regarding where bitcoin fits into the overall financial ecosystem.
“Cryptocurrencies also raise concerns with respect to traditional financial and law enforcement policy issues, like money laundering and consumer protection. Agencies across the government are working to make sure that the basic rules of the road for financial systems continue to apply in a sensible way to bitcoin and other cryptocurrencies,” he continued.
The latest debate to surface in the bitcoin community has been about its block size limit, a point that Felten noted in his writings.
Because traditional bitcoin has a limit on how many can be produced and how many transactions it can handle, there are challenges the bitcoin community has faced since day one in terms of making it go mainstream. It’s also under the sway of a small number of people who control a large part of the bitcoin universe.
That’s created limits, concerns about its legitimacy and fears for its future. Those debates have also prevented bitcoin’s technology (blockchain) from innovating itself in order to change how the virtual currency is used. And now, there are bitcoin developers who have been discussing Bitcoin Classic, a rival to the old-school virtual currency. This vision doubles bitcoin’s recorded transactions (AKA blocks) and would help the network’s capacity grow.
“Getting bitcoin to scale up is the most important thing right now,” said Gavin Andresen, the developer behind Bitcoin Classic. “I’m not interested in shutting anybody out. I think we can scale up and keep it just as open as the Internet is.”
But, of course, there are skeptics who suggest that growing bitcoin’s capacity would destroy the virtual currency. And there’s another side of the debate that’s saying this divide in the bitcoin community is preventing any innovation from occurring.
This has left the bitcoin community split, which could potentially delay the conversations about blockchain innovation as it relates to how it could transform a financial system many believe is out of date, clunky, costly and inefficient. The government, of course, has had a watchful eye but has not taken a stance or actively begun its role in bitcoin regulation policies.
At least, not yet.
“I am also watching with interest the debate within the bitcoin community about the block size limit. (To be clear, the government is paying attention to that debate but are not participating in it.),” Felten wrote. “This is a challenge to bitcoin’s governance model, because it requires the community to come to a consensus on an issue where there seem to be high stakes and plausible arguments on each side.”
While there have been plenty of reports about how this debate will split the bitcoin community into two directions that may be difficult to bring back together, some in the bitcoin community believe that the debate will only spur a better version of what bitcoin currently is. At least, that’s what the CEO of Coinbase said.
“We’re not going to split in two; we’re going to upgrade,” said Brian Armstrong, who said he would support the newer version of bitcoin. “It’s the first time the world has seen a global financial system that can be upgraded in real time.”