Last year, in a report, the Reserve Bank of India acknowledged the transformation the technology can bring to various financial market transactions. Bitcoin, a web-based “cryptocurrency” used to move money around quickly and anonymously with no need for a central authority, is one such increasingly popular alternative. Block chain (increasingly now referred to as blockchain), the underlying technology, is a distributed — across a network of computers — ledger secured cryptographically, which can be used to record any transaction (including an exchange of value).
In an interview with Sanjay Vijayakumar , Brock Pierce, managing partner at Blockchain Capital (a venture capital firm that invests in blockchain-enabled technology companies), and chairman, Bitcoin Foundation, which advocates bitcoin and its development, speaks about the currency and its use-cases in a market like India.
Bitcoin has gone through turbulent times…
Most people are judging the success of bitcoin based on the price, which is actually one of the least significant data points; it is very easy to look at the price and track that as primary barometer of sentiment. You need to go deeper and look into the fundamentals: is the transaction volume going up or down? Bitcoin volumes are going up month over month.
Bitcoin had bad press recently, with a famous developer (Mike Hearn) saying it is a failed experiment, which I think is absurd. He is saying that because of scalability issues. Facebook too went up from zero to a billion users. There are challenges, but they are good. So the issue is not can it be scaled; it is abouthow to move forward.
What are the use-cases of Blockchain beyond Bitcoin?
I have looked at 800 companies, and invest in companies in this space as a sector-focused venture fund. The first real use-case of bitcoin [beyond] a theoretical benefit, is in remittance-based countries. It is the cheapest, fastest and safest way to send money between two countries; it is faster and cheaper than Western Union. The real utility of technology like this would be in places like Latin America, Africa, South East Asia and places like India were you have a huge population that does not have financial inclusion or financial tools. No one has ever counterfeited anything on bitcoin or the blockchain. You can have a transparent election process using blockchain. You can have the entire notary process done on it.
What are the use-cases you see for blockchain technology in India?
Gold trading can happen on blockchain, and they can transact and redeem securely.
Without investing billions of dollars in infrastructure, India could have the opportunity to serve the underbanked through blockchain technology. If mobile penetration is 80 per cent, that entire population can be banked overnight, provided the technology is made available and people understand how to use it.
But technology adoption is slow…
Growth rates of bitcoin is slow. It took me a year to invest in bitcoin. It is going to be many years before we can adapt to it. We have invested in a company called Abra — in which Ratan Tata has invested — which offers products and services you don’t even know you are using. Abra does not say ‘bitcoin’ anywhere in the product. Convincing people to use the technology is going to take a very long time. But I do know that blockchain technology is going to change the world.
Are you watching Indian startups?
I have a global investment mandate. Most of my investments happen in companies in the US, because it is easier to invest in things you understand in terms of the legal system and management teams. I would be keen to invest in companies in this space in India, as a co-investor along with venture capital funds since I am not going to be here.
Click on the bitcoin logo below to buy, use or accept bitcoin. Unocoin is India’s most popular bitcoin wallet.
To read the bitcoin white paper, visit: https://bitcoin.org/bitcoin.pdf
