Sam Brown: Hello everyone I am Sam Brown, I am an associate in Wragge Lawrence Graham & Co's Tech team.. So, I am here with Paul who is the Co-Founder and CEO of Quantave. He is also a board member of the UK Digital Currency Association and also acts as an organiser of the world's largest digital currency networking group. Paul, many people argue that Bitcoin or the blockchain will not replace the existing monetary or payment systems but will actually act as a catalyst for change. How do you see the landscape developing over the next five years?
Paul Gordon: I think that is a sensible approach and I think over the next five years and in the short-term that is probably a more likely outcome but I do think that in the longer-term that you could start to see a transition over to using the new technology on a larger scale but I think it will be a gradual process. I think you are definitely going to see existing banks, financial institutions, payment processors experimenting with the technology. The landscape has changed even in the last six months or year, people showing an interest at that kind of level. But at the same time the beauty of it is and with most of the technology being open-source it does not prevent anyone coming in and in their bedrooms or in their garage and experimenting. I think ultimately you are going to see the real innovation come from that space still. There are problems generally in the UK and beyond in terms of new companies being able to get bank accounts and that is stifling some of their ability to get up and running as businesses, but I think that will change; the regulatory landscape will change, compromises will be found and the technology itself will probably evolve to overcome some of the fears and concerns that incumbents and regulators and governments might have at the moment. But these things all take time. At the moment it is a bit of a melting pot and a bit of a free-for-all and just like the early days of the internet, you cannot really predict what is going to come out.
Sam Brown:Now, it is often said that it was not the digital camera that put Kodak out of business but actually the integration of cameras into mobile phones. Should industries outside the traditional financial sector be paying attention to Bitcoin either now or in the near future and how disruptive potentially beyond the more obvious industries could Bitcoin and blockchain be?
Paul Gordon: For the last year or so, as more and more people are waking up to the possibilities and potential, people that have maybe been hovering around the space for a bit longer have been talking regularly about Bitcoin 2.0 technologies and this while people are still generally trying to get their head round Bitcoin 1.0. But it opens up all sorts of potential, way beyond what most people just see in the headlines as a wildly fluctuating currency and that is because if we look at the underlying technology itself, when you strip it down, it is really just a big shared public database and the way the technology is being designed it allows that to exist effectively in a cloud and everywhere and if you just consider the idea of how databases are used in general that opens up all sorts of possibilities and in terms of one common topic that is spoken about is the idea of blockchains for contracts and smart contracts and recording records. So I think anywhere where industries have served a purpose of recording data, transferring data, whether that is value, information that is information with a value,they stand to be disrupted in many ways. And I think you are seeing example projects like Ethereum coming along, a project called Factum which is more focussed on actually acting as a database which interacts with a blockchain. Things like Storage which is a decentralised file sharing platform which chops up files and stores them on people's spare hard drive space and pays them for it. These sorts of things can affect lots of different sectors.
Sam Brown: So how do you see money being invested into the industry, how do you see the investors trying to monetise Bitcoin and, with that, is there a concern that the way organisations are trying to make money out of Bitcoin, you know traditionally taking a percentage or some carry on the transactions, making it look more like a traditional banking system and reintroducing the issue of trusted third parties?
Paul Gordon:Yeah I do actually, I think there is the obvious rush in the first few years, viewing the whole central benefit in terms of consumer payments and payment processing and a lot of money has come into that space and I think we have almost crossed the $500 million mark now, most of which has come in in the last 18 months in VC capital and a lot of it has gone into new wallet services, exchange services and payment processing. But I am not sure we are seeing the kind of exponential growth in consumer adoption which should be kind of sitting alongside that. I do not think that is a problem in the long run, I think maybe people focussed on the wrong area first, but where I think there is a lot of focus now is on improving the rails that exist in the traditional financial system because they are very kind of archaic in many ways and very convoluted processes.
So I think you will see it utilised, the technology utilised there and ultimately the cost benefit will filter through to consumers because those costs have come down internally at existing financial institutions. But, likewise, as I said there is probably going to be something that comes out of the blue which just serves a purpose which is far more cost efficient than the things we have now. But I also think, very importantly, I think we are just at a stage where we are literally, people are trying to build a bridge from an old world of finance to a new world of finance and they are two very different things and I think that some of the companies that do that job now and serve that purpose now, and yes they take carry and they take that margin now. Ultimately they may not be around themselves in a few years because the technology will actually push them out of business once it evolves to that degree, but if they are smart they will adapt and they will recognise that and I am sure they will because BitPay is a very big well-funded payment processor. Ultimately in the future, maybe a distant future will there be that much need for their service but knowing the company and the people involved they will adapt accordingly and move on to new things.
Sam Brown: Thank you for listening. I hope you found that interesting and useful. If you do have any further questions please do not hesitate to get in contact with any one of our Tech team.