The Bank of England: RSCoin digital currency flexibility and supervision combined with the “hybrid” system
Editor’s note: the author BrianArmstrong is CEO of digital currency company Coinbase, in his opinion, coins and other digital currency like islands, and the exchange is to connect these islands of the bridge, if bitcoin wants to succeed, we need more people into the island, which is one of the key compliance.
Occasionally, I see the digital currency industry will discuss the value of compliance. I mean to cooperate with regulators, law enforcement agencies and banks.
Many of the early adopters of bitcoin belong to privacy advocates, it is not surprising, but the so-called compliance refers to most of the work, KNC rules (know your customer).
But in my opinion, privacy advocates oppose embrace compliance, this is a short-sighted behavior, because they may get the biggest benefits from.
And want to make a digital currency to success, to allow people to access to the bitcoin network or Ethernet fang. If their existing assets are dollar, euro, yen or some other things (such as real estate), they need to have a simple way to these assets will be converted into digital currency.
There are many ways to obtain digital currency, moreover, not all digital currency will disclose your identity. For example, you can use the LocalBitcoins mining, or by working to earn it. However, these methods are cumbersome for ordinary people. If you can’t find people willing to pay you bitcoin, or you don’t know how to set up a machine, this is what to do?
In this world, there are a lot of people are more inclined to use ordinary payment to buy digital currency, such as credit card, bank transfer or telegraphic transfer. The payment reduces the access threshold of digital currency.
As a digital currency company, if they want to enable convenient payment, you need to comply with the law. If we want to provide a convenient way, a lot of money can be converted to digital currency for people, digital currency company we need, we need to embrace and specialize in compliance. Specifically, these companies need to be able to use their systems to prevent the crime. Once this new network can flourish, we will have a lot of opportunities, in a purely digital world (monetary and financial 1 has nothing to do with the create) new products and services, and some of them will still attract privacy advocates.
Simply said: if you have bitcoin, you should support the people in any way to buy bitcoins (regardless of whether you use these services), because the network effect will increase the value of bitcoin. More simply, compliance will let you become richer!
The building of a bridge
The bay bridge connects San Francisco, Yale Babu (YerbaBuenaIsland) and Oakland Buena Island
You can put the digital currency compared to one island, while the digital currency exchange is the bridge linking the islands.
In the early time, bitcoin bridge on the island did not any convenient (maybe there are some boats, or some helicopters). Some of the early bridge because it is built in a hurry, they already collapsed. But as a solid bridge, they still exist, people enter bitcoin island a sharp increase. Coinbase alone, it has helped 4 million people extradited to the island, and to import capital has reached $4 billion. (at the time of this writing)
An important property of the bridge is that it is connected with the mainland. The bridge needs to have stable and safe, so at both ends, the bridge builders need to understand and respect each side of the culture and norms, and to master two languages, to comply with local laws and customs. Bridge builders is possible with you is not the same, but they are your allies, can help you achieve your goals.
Exchange in the wallet, like the Internet service provider (ISP) in the Web browser
The Internet service provider (ISP) provides connectivity to the Internet, and digital currency exchange for block chain provides connectivity.
This is not accidental, many early bitcoin entrepreneurs have begun to provide ISP services (such as WencesCasares, Itou Chi, JustinNewton, and AustinHill).
The underlying protocol Web browser to help people to use the Internet, the same protocol is to use digital wallet, money to help people.
I think the Web browser can provide some degree of privacy for you, this is an important feature, the same applies to digital currency wallet. They are just in your own device (or client) software running on. However, the ISP and the exchange is not the same, although you have data privacy and other legitimate rights and interests, but you and between these entities, with personal contacts, you use ISP is not anonymous, also is not restricted.
In the early development of the Internet, ISP and web browser sometimes together (AOL), but they eventually separated, and the reason is also fully.
If you are looking for anonymity, you may not find in any connection to the traditional financial system of the exchange, but you can find it from bitcoin wallet. By the way, Coinbase is an exchange, rather than a wallet.
Connect to the compliance of the digital currency exchange of traditional financial system, is the necessary infrastructure to help the growth of digital currency. It is very difficult to establish (industry of the various law enforcement and security vulnerabilities, will illustrate the problem (such as BitInstant, Ripple, Bitfinex), in addition, there are various kinds of regulators, including BitLicense, eMoney, MTL, FinCEN regulation, etc.).
In Coinbase, there are 20% employees responsible for the compliance of the exchange. In order to measure and reduce the exchange risk, Coinbase has a lot of problems to solve. If you are willing to help the construction of the bridge engineer or compliance / risk professionals, we are very happy to chat with you.
We spent a few years, millions of dollars on compliance of this point, making the Coinbase industry leader, we will continue to make unremitting efforts to make the bridge to remain open, and to help the success of digital currency.
Thanks to DanRomero, ErinCoppin, FredEhrsam, JohnYi, JuanSuarez and SoupsRanjan read drafts of this article.