Elected Officials Everywhere,
In the 1800s, the United Kingdom passed a series of laws that became known as the Red Flag Acts. These acts were aimed at a new invention that was beginning to disrupt the rail car and horse and buggy industry. This invention was called the automobile and its purpose was to leverage technology to be more efficient. Unfortunately, due to the Red Flag Acts laws, it had the opposite effect.
The Acts included corrosive regulations, like requiring a man to walk in front of the automobile as it entered town waving a red flag to notify the citizens of the pending “danger on wheels” headed their way. They also severely limited the speed these automobiles could travel, which was one of the primary benefits that they offered. But what they really limited was one thing: innovation.
The acts stifled innovation and made it difficult for this disruptive idea to grow as quickly as it did in other countries, and in the end, the United Kingdom was left behind in the race to develop the automobile.
You might not be shocked to hear that it later turned out it was lobbyists for the rail car and horse and buggy companies pushing for these stifling laws. These companies were able to squeeze out profits for a few more years but they did so at the cost of their country. Their singular focus on the profitability of their own industry, and their powerful grip on politicians who made the laws, allowed them to stifle innovation, which ultimately damaged the United Kingdom. Britain lost its standing in the multi-billion dollar auto industry to Germany, Italy, the U.S., and others.
We are in the midst of another revolution now and it embarrasses me to say that the United States is following the path the United Kingdom followed with the Red Flag Acts of over 200 years ago. We are stifling the innovation of what people refer to as one of the most important technological developments since the internet. I am talking about the technology called Bitcoin.
You’ve probably heard of it in the news. The mastermind of an online drug empire going to jail, the collapse of MtGox, and the laundering of money through this invisible currency. While these juicy headlines spread like wildfire there is much more going on that does not. Did you know the NYSE is building a platform for trading stocks via Bitcoin technology? What about the fact that nearly $1 billion has been invested into Bitcoin-related startups in the past 2 years? Have you heard of the dozens of Visa executives leaving their jobs to join Bitcoin companies?
Bitcoin is surrounded by misconceptions. Despite what many think, Bitcoin is not just a currency. Bitcoin is a technology. It is a platform and it is capable of doing what no other technology has ever done in the past. Imagine escrow without escrow agents, or a real estate title system that didn’t require a $15B industry just because it can’t maintain proper databases. Imagine being able to send $0.15 to someone in the most remote jungle of China, and then them being able to send it right back to you. All nearly free, and all done instantly.
While I could go on and on with examples for you, the truth is, no one really knows what Bitcoin will do in the future. This is the case with every new technology. Imagine back when you first heard about the internet, did you ever imagine what it would be capable of today? What about the cell phone 20 years ago? If someone had told you that you could run your entire life from your pocket, you would have thought they were crazy.
My point is this: no one can predict what a technology is capable of because that’s what technologies do, they evolve and expand, and the good ones disrupt inefficient systems.
While this seems logical to most, this logic doesn’t seem to be understood in the offices of our state and federal regulators. Several states (recently including New York) are passing aggressive laws that they say are aimed at safely regulating Bitcoin companies. But the laws they are passing are not constructive regulations — they are designed to stymie innovation.
Bitcoin will continue to grow, because there is no real way to stop an innovation that people demand and see value in. Innovation is like a stream of water. You can block it, but it will always grow in size and eventually forge new rivers around the dam. That’s exactly what we are seeing happen now: jobs, technology, and entrepreneurs are flowing right out of this country.
Earlier this month, the BitLicense passed in New York. Twelve leading Bitcoin companies announced they would leave New York that day. Bitcoin sites offer notices on the homepage that they don’t serve Russia, North Korea or New York. Does that not alarm anyone? The financial capitol of the United States, indeed of the world, is being left behind.
Do you not find it concerning that a state in the United States of America is appearing alongside countries that are known for abusing their citizens’ rights? What kind of message does this send?
The BitLicense of New York passed and other states will likely continue to pass similar laws. These laws will slow down Bitcoin’s growth here in America, but Bitcoin will continue to shape global financial markets and change the way business is done all over the world. The question is whether America will be there for it, or find itself playing catch up and working at a disadvantage to other countries who were more receptive to innovative technology from the start.
It doesn’t matter how much money lobbyists give, the laws that corrupt politicians pass, or how many big companies work to eliminate Bitcoin. It’s not going anywhere and there is nothing anyone can do about that. Bitcoin connects the world financially just like the internet did.
The internet brought people online and Bitcoin is bringing money online.
I ask you to do your research, call upon experts, and spend time reading about the opportunities a technology like Bitcoin can bring to our world. Read it with an open mind; pretend you are just reading about the internet for the first time 20 years ago. Would you be skeptical? Of course. Would there be concerns about regulation? Absolutely.
Passing regulations on Bitcoin now is a foolish and irresponsible decision. To do so is to assume that one understands how the technology will develop, how it will be applied, and how many applications it might have. These are the very early days of a very powerful technology, and it is too soon to try to draw it into a regulatory box.
The United Kingdom missed an enormous opportunity with the automobile, but they learned an important lesson. In fact, today the UK is leading the world in its support for Bitcoin technology by passing laws that make it a favorable destination for companies all over the world. They understand, as we should, that to compete in the global economy demands early adoption of new technologies, not skepticism and heavy handed regulation.
You don’t stay on top by stifling innovation; you stay on top by innovating. It’s a truly scary path we are headed down and you have the power to stop it. Will you?
We have always been a nation of pioneers, let us continue writing history with our inventions.
Co-founder & CEO of Airbitz