Two of bitcoin’s most prominent advocates took to the stage Saturday to debate why the No. 1 digital currency has a bright future and is here to stay.
Pitted against two academics, the business tycoons — venture capitalist Tim Draper of Draper Associates and Patrick Byrne, CEO of Overstock.com OSTK, +1.09% — looked, on paper at least, to be a sure thing in the never-ending bitcoin bubble debate.
However, it was anything but that, as Gillian Tett, U.S. managing editor at the Financial Times, and University of Chicago professor Eric Posner took down the two moguls in an audience vote, successfully arguing against the merits of bitcoin.
Byrne began his argument saying the No. 1 reason why bitcoin is here to stay is that people have grown inherently untrusting, especially in the wake of the financial crisis, when many libertarian-leaning crypto bulls felt the banks and governments failed them.
“How do we solve trust?” said Byrne. “We create these central institutions that, since we can’t trust each other, we just trust them. For the first time in 6,000 years, we can have consensual exchange among strangers that is trustworthy,” (that consensual exchange being the ledger that bitcoin runs on).
Bitcoin transactions are stored on the ledger, confirmed by other computers and are, for all intents and purposes, anonymous. The problem: Where’s the backstop when things go wrong?
“If you’re going to a bank, you’re not only trusting your computer for the value of your money… but you have a backup,” said Tett, in response to a comment from Draper. “And the backup is called a central bank. With bitcoin, you are only trusting computers.”
Draper’s approach was more vivacious and to the point, saying digital-currency technology will dwarf anything society has ever seen.
“This is bigger than the internet. It’s bigger than the iron age, the Renaissance. It’s bigger than the industrial revolution,” said Draper. “This affects the entire world and it’s going to be affected in a faster and more prevalent way than you ever imagined.”
Draper is never one to shy away from big bets. The venture capitalist’s latest prediction for the price of bitcoin is $250,000 by 2022.
For Posner, the law professor from Chicago, his argument against the digital currency was the very traits that its followers cite when championing the decentralized technology.
“So, bitcoin transactions are anonymous or, more accurately, pseudonymous,” said Posner.
“The people to whom this is most attractive is criminals. That’s why there’s a great deal of criminal activity in the bitcoin market. Bitcoins are very good for money launderers, drug criminals, human traffickers and many other criminals,” he said.
The law professor went on to say that bitcoin is only anonymous for sophisticated people and the majority of users require an intermediary body, usually an exchange, which gathers users’ information. Essentially these exchanges are banks, the very thing the crypto community is trying to upend.
After casting votes before the debate began, onlookers were asked to vote again after it concluded, with the winning team being the one whose votes increased the most. After a neck-and-neck pre-debate vote, the law professor and editor came out victorious, taking 68% of the votes.
However, the tech entrepreneurs didn’t go home empty-handed. Over the weekend, the price of bitcoin BTCUSD, +0.05% hit a six-week high, which is sure to please the two digital-currency owners.
Saturday’s event was an Intelligence Squared U.S. debate presented in partnership with the Manhattan Institute’s Adam Smith Society.