Edmund Moyis one of many new faces that is supporting the cryptocurrency movement. It’s Mr. Moy’s past work, however, that makes his presence among us interesting.
From 2006 through 2011, Moy served as the 38th Director of the United States Mint, nominated by President George W. Bush.
And on several occasions now, Moy has spoken in the defense of the interests of cryptocurrency and the cryptocurrency community — actions highly applauded by enthusiasts around the world.
Curious about his arrival on the crypto-scene, Moy allowed me the opportunity to ask him a few questions related to the matter.
Here are the responses in full:
Eric: When and did you learn about bitcoin?
Ed: The first time I heard about Bitcoin was when I was Director of the Mint. It was a small footnote in my regular coin demand forecasting report that mentioned Satoshi Nakamoto’s paper. Several months later there was an expanded footnote mentioning the release of the open-source software. It really didn’t register with me or my colleagues at the time because it was an idea that had no discernible impact on coin demand during my tenure, which ended in 2011. When Bitcoin began being a regular news story in 2013, it jogged my memory and I began following it again.
I also have the freedom to express my personal opinions now that I’m no longer in public office.
Eric: What attracted you to bitcoin?
Ed: Being one of the few people who have direct experience making currency, regular interaction with the Federal Reserve and the U.S. Department of the Treasury, and leading a federal regulatory office, I have a professional curiosity and interest in innovations that could have a huge impact on payment systems and currency.
From a public policy perspective, I’m attracted to Bitcoin’s promise to help forge a better and more economically prosperous world. Bitcoin as a protocol can enable more secure transactions over the Internet, virtually instantaneous transactions all over the world, and all at a fraction of the cost of using current financial and payment systems. What gets me excited about this is that international transactions can happen with much less friction. This can have a huge positive impact promoting international trade, for families remitting money across national borders, and for nonprofit organizations operating in foreign countries getting get a greater percentage of donor money because they are paying less transmittal fees.
Bitcoin can also challenge the oligopoly of big banks and credit card companies through its peer-to-peer transactions. I get negligible interest on my savings account and pay for my checking and wire transfers, while the bank benefits by investing my money. Now I can be my own bank for these transactions and never have to worry about a run on my bank because of their fractional reserve banking practices. This also means that the many unbanked people in the US (and the world) can now enter the financial system. Imagine the impact of billions of people starting to save, budget, and buy bigger ticket items. Small businesses can especially benefit because they can avoid paying hefty credit card fees, which can mean the difference between thriving and going under in a small margin business like a restaurant. And Bitcoin’s divisibility also allows for micro payments, which could monetize content more effectively and thus revitalize important sectors like local newspapers.
Personally, I’m a free market advocate who believes in creative destruction. After being involved in the rescuing of our financial system starting in 2008, I believe that our banking system can benefit from the competition that can come from cryptocurrencies in general and Bitcoin specifically.
Eric: You’ve seemingly become a proponent of the digital currency movement on social media, even keynoting at a conference. Do you feel that strongly about it?
Ed: I feel strongly about the promise of cryptocurrencies. Of this generation, I think Bitcoin has the best chance to become mainstream the quickest, but that future is not set in stone. There has been a lot of investment to help develop products and services to make Bitcoin accepted to the general populace but there are significant barriers to overcome. Many potential users don’t understand Bitcoin and think of it as something used by criminals trying to circumvent the regulatory system or that it is an unstable currency.
In other words, Bitcoin needs to work on its brand image. Much like the 1.0 generation of e-commerce companies trying to find the right business model using the Internet, a few winners might emerge but it may take the 2.0 generation to be more successful. Boo.com’s failure led to Gilt and Net-a-Porter, Ritmoteca.com led to iTunes, and Pets.com led to Wag.
Eric: Where do you see bitcoin in the next five years?
Ed: I believe that the next 5 years will be critical in Bitcoin’s development. Three hurdles to overcome are increasing government regulation (state, federal, and internationally), introduction of products and services that convince potential users that Bitcoin is the best choice for certain transactions, and that the relatively small Bitcoin ecosystem can scale up to handle significantly more volume. If Bitcoin can successfully navigate these issues, it will have a firm foundation to become mainstream. If it doesn’t, it will have limited market share and the next generation of cryptocurrencies will need to build on the lessons learned.
Eric: How do you see the government reacting to bitcoin’s growth moving forward?
Ed: First, Bitcoin’s growth will challenge the traditional notions of currency, which is basically the money of a sovereign nation. It’s assumed to be something that a government should uniquely produce. I doubt that governments will give up that monopoly without a fight. But in addition to being a currency, it is also a protocol. That protocol enables much more secure transfer of value over the Internet and dramatically reduces the cost. So there are elements that could be encouraged or even co-opted by the government (Ecuador creating its own cryptocurrency).
Second, government is not monolithic. There is no international body that has the authority to regulate Bitcoin globally. So each sovereign country has to figure this out themselves. Switzerland was considering passing legislation that would recognize Bitcoin as a foreign currency, while the United States is taking a wait-and-see attitude, and countries like China have all but banned it. Even in the United States, government is split between federal and state.
Federal government is also not monolithic because it is made up of many different regulatory agencies, each with specific regulatory oversight. The SEC looks at investments, the Fed looks at banking, the IRS looks at taxable events, etc… At Janet Yellen’s first hearing, she stated that the Fed did not have the authority to regulate Bitcoin as part of the banking system but that it’s Congress’ job to figure out what Bitcoin is, where it belongs, and pass a law giving that authority to the appropriate regulatory body (or even create a new one). Further complicating things is that all these federal regulatory agencies don’t coordinate with each other and can end up with regulations that conflict with each other.
If federal clarity is lacking, then each state is left to figure this out. I think some in the Bitcoin community were deeply disappointed with New York state’s first attempt. California seems to be headed in a much more encouraging direction. The state regulatory environment could end up looking much like health insurance. Each state has an insurance commissioner and each insurer must comply with all the unique mandates in each state, which makes for a patchwork of programs that has costly compliance issues but generally works.
I’d like to thank Mr. Moy for taking the time to answer my questions. You’ll be able to see Moy speak on the topic of cryptocurrencies at the Cryptolina conference in Raleigh, North Carolina on Saturday, August 16th.
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