On October 8, one of the most prominent thought leaders in the crypto space, Andreas Antonopoulos, was invited to share his views and knowledge on Bitcoin and cryptocurrencies.
The session of the Senate of Canada’s Banking, Trade and Commerce committee, which focused mostly on the regulatory aspect of digital currencies, lasted for almost 2 hours and has been widely lauded by the Bitcoin community.
The presentation also echoed the voice of the Bitcoin Embassy, the Bitcoin Foundation Canada and the Bitcoin Alliance of Canada, which also testified before the committee on October 2.
The Canada-based Bitcoin Embassy has announced its full endorsement of Andreas’ presentation. “The Bitcoin Embassy greatly appreciates M. Antonopoulos’ intervention in the Canadian debate regarding cryptocurrency,” reads the official press release. “And we are happy to endorse M. Antonopoulos’ testimony, which will certainly be retained as a key source of expertise for Canadian policy-makers.”
As reported by CoinTelegraph back in August, regulations for cryptocurrencies in Canada are expected to go into effect in 2015.
Decentralization vs. Centralization
Andreas made some poignant statements before the committee. He said:
“[…] entities near the center of a traditional financial network are vested with enormous power, act with full authority, and therefore must be carefully investigated, regulated and subject to oversight […] to ensure that the central actors do not abuse their authority and power for their own profit.”
On the contrary, in decentralized systems such as Bitcoin:
“There is no center to the network, no central authority, no concentration of power and no actor in whom complete trust must be vested. […] Bitcoin does not force users to surrender their identity with every transaction and put their trust in a chain of supposedly vetted intermediaries who must be trusted to control access to, securely store, and protect transaction data […] Because in Bitcoin trust is not vested in central actors, there is no need for centralized regulation and oversight.”
One of the main takeaways from these statements is that the need for regulation decreases with innovation.
Nonetheless, in today’s Bitcoin environment, there exist many services which take on the role of processing and storing users’ bitcoins. Such entities produce centralization, and should thus, Antonopoulos argues, be subject to the same regulatory oversight as fiat-based operations.
“In short, ‘if control over the user's funds has been centralized, then that institution puts consumers at risk,’” the results of the meeting note.
However, it is also noted that innovation in the space is constantly devolving responsibility back to the consumer, meaning that as time progresses, fewer centralized environments will be simulated and thus less regulation will be required.
“I think this technology needs time to breathe”, Antonopoulos states, “it needs time to show the full potential of what is possible with decentralized, programmable money”.
The onus on the consumer to be in control of their funds is not only a good thing, but the way forward, he continues.
“Bitcoin’s decentralized nature affords consumer protection in the most powerful and direct way – by allowing bitcoin users direct control over the privacy of their financial transactions. Bitcoin does not force users to surrender their identity with every transaction and put their trust in a chain of supposedly vetted intermediaries who must be trusted to control access to, securely store, and protect transaction data and vulnerable account identifiers. Bitcoin transactions never expose vulnerable account identifiers and bitcoin users can protect the privacy of their transactions without relying on, or trusting, any intermediaries.”
The state of flux in Bitcoin, amid the rapid growth of a complex infrastructure servicing both business and consumers, was what spoke particularly clearly to the committee. Antonopoulos was keen to vouch his approval in response to the meeting’s final question, which proposed recommending no regulation for the time being, and allowing the space to mature before revisiting the issue in the next few years.
“I think that would be a very good idea,” he said.
“I think there is some room for clarification, clarifying for example the tax status for individuals or at least clarifying the right of an individual to make choice in the currency they use as a consumer, and to affirm the legality of using digital currencies in all forms of commerce as entirely equivalent to any other national currency... Recognizing this is a private form of barter and transaction, recognizing the corresponding principles, which I consider neutral principles, but they are principles of enlightenment, which are freedom of association, freedom of expression and freedom of conscience.”
He concluded, “So I think that removing ambiguity in that particular arena for personal use would be enormously useful.”
His final response gained much applause from the community, with Reddit in particular echoing the Senate’s support and gratitude for Antonopoulos’ appearance and explanations.
The results of the consultation will be uniquely interesting in demonstrating the Bitcoin community’s influence on legislation directly, without the input of a middleman in the form of a working group, think tank or otherwise.