While the fintech world is yet to see the implications of the DAO hack and Brexit, Cointelegraph attended MoneyConf in Madrid to collect expert opinions on the future of money. In-between the inspirational keynotes and thought-provoking panel discussions Cointelegraph had a chat with Darrell MacMullin, CEO of BitGold.
MoneyConf is an invite-only event organized by experts behind Web Summit, the world’s fastest growing technology event, and focused on the future of finance. This year more than 1500 decision makers from across the industry, including over 100 exhibiting startups looking to revolutionize the industry came to sunny Madrid.
Challenges of digital currencies
MacMullin says to Cointelegraph about the DAO attack:
“It is exciting to see what is going on with different cryptocurrencies. The situation around the DAO hack and how serious this is, is still rather unclear. Many conventional systems have been hacked many times. Take, for instance, the Swift system which was hacked a few times last year. The biggest concern here is of course the reputation and gaining of trust, if you are trying to build a currency and make people use it as a primary currency making them invest in it.”
The fact that in the case of digital currencies you are dealing with just the digital ledger and digital token is rather challenging. Any attack to the ledger is therefore putting all the system at great risk. The other downside of digital currencies, as mentioned by Darrell, is that all transactions are anonymous which makes it difficult to resolve the problem if something goes wrong.
Closed loop private ledger
BitGold offers a platform for buying, selling, or redeeming gold using BitGold’s Aurum payment and settlement technology.
“At BitGold and GoldMoney, one of the benefits we have is that we are dealing with the physical gold. We have built a digital ledger and it is a closed loop private ledger. Even if we were to get hacked our system has a capability to reverse all the paths. Even if someone was to get in and mess around with the ledger we still have all the physical gold.”
The ledger is being backed up constantly and every time someone buys gold using BitGold platform a special serialized barcode is dedicated to it.
According to MacMullin, the system is highly secure and it is almost impossible to hack it, “unless there is a simultaneous physical attack along with the digital attack on the ledger, but it is very unlikely,” he says.
Ethereum vs Bitcoin
MacMullin shares his view:
“I don’t think this attack will put an end to Ethereum. It is certainly a blow in trust, however, I think that the community behind Ethereum responded more than correctly - they are getting behind it trying to resolve the issue and put Ethereum in place.”
In his view, the race between Ethereum and Bitcoin is not about one replacing the other. Both currencies have their support communities, which are rather large, and if they do not replace each other, there is certainly going to be an overlap between them.
“I like what Ethereum is doing on a whole bunch of different levels. Meanwhile, there is some revolutionary process going on with Bitcoin. However, both currencies are still at the very early stage of their development, they are both still experimental money and are tiny. If you put all cryptocurrencies in one basket, altogether they will be worth less than $13-14 billion - you can’t really run a one country economy with this amount.”
What is money?
According to MacMullin, a good currency has to offer three elements: a strong unit of account, a medium of exchange, and a really good stored value.
“Ethereum offers a strong unit of account and a medium of exchange - the currency is distributed globally. Both Bitcoin and Ethereum are very interesting experiments. They are significantly expanding choices of in what form to store your money, and how to transact. But what’s the downside? Volatility is one of the biggest concerns for all digital currencies. And if we speak about stored value, it is just digital, there is no physical element to it. And it is a challenge.”
The case of Brexit
In MacMullin’s opinion, just like traditional currencies, digital currencies are very dependent on what is going on in the political and economic arenas. Since they are mostly considered to be more efficient alternatives to traditional currencies, they have to be more responsive to challenges, they have to offer something more.
So, the question here is how to scale up, how to get from where you are now to the next stage? Major issues happening with fiat currencies are, in this case, driving digital currencies further, and it is a great benefit.
MacMullin shared his opinion on Brexit, which certainly has implications for the financial market, which are already visible.
He says to Cointelegraph:
“I don’t think that Brexit will somehow affect fintech in a way it will go outside the UK. It is a very strong market. London, New York, Hong Kong - are the three biggest capitals of fintech and I don’t think this is going to change overnight. The value of currencies might exploit the need or the desire of people to move away from the fiat currencies.”
In his opinion, digital currencies will become more attractive for people in this case, and the interest in them will certainly rise, as they are offering better means of transacting and a better store of value.