Shakil Khan: cryptocurrencies are here, embrace them

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Shakil Khan and David Landscape 2

Shakil Khan: cryptocurrencies are here, embrace them

Whether it’s Bitcoin, or another name, cryptocurrencies are
already disrupting payments and won’t be stopped, serial investor
Shakil Khan told the audience at Wired Money 2014. So get on board
with change.

 

(Wired) Khan explained how he has seen the growth of Bitcoin from a
much-misunderstood, unstable currency, to a more mature offering
that is finding its place in ecommerce and investor portfolios. So
rather than focus on regulation, which will only delay the
inevitable, the financial sector needs to focus on supervision and
take on the opportunities cryptocurrencies provide.
Khan, interviewed on stage at the Wired conference by editor
David Rowan, has invested in Spotify and YPlan, and advised teen
founder of Summly Nick D’Aloisio. But it was in 2012, when he first
heard about a payment company attempting to tackle the Bitcoin
ecosystem, that the cryptocurrency crossed his path. In the
following years, he found himself becoming a point-of-contact for
investors, suddenly intrigued by a currency that went from $10-25
per Bitcoin in 2012 to $260 in 2013.
“At that stage I got a lot of inbound emails from VCs and
entrepreneurs asking who is this company Mt Gox? Not because I was
the smartest person, but because there was a different wave of
people who weren’t publicly talking about Bitcoin. Morgan Stanley
was phoning me not because we had a relationship, but because
people were calling them and asking advice, and they were coming to
me.”
Most recently, Khan was part of a $510k investment round into peer-to-peer payment solution
BitPay. That’s a lot of hard cash for a currency that dips and
peaks dramatically according to government opinion — for instance
when the FBI referred to it as a currency, Bitcoin became stronger;
when China restricted exchanges and warned it would keep an eye on
the currency, its value tumbled.
“I don’t have the answer to this but no one is asking the
average consumer to participate in this — it’s the same as
stocks,” said Khan. We in the tech industry are more than familiar
with Bitcoin, beyond the Silk Road headlines, and those in the
financial sector have followed suit. But it is not yet something
that is impacting the average banking customer. “Right now, it’s
something that’s not for the faint hearted, just like stock trading
where people make 3 percent gains one day, and 25 percent losses
the day after.”
This kind of threat, is not enough to stall the progress being
made in the cryptocurrency ecosystem — and this is because, as
Khan reiterated onstage, there is a “fundamental problem with
payments”.
“I can sit here and make and send an audio or video message in
three seconds. But if I want to pay someone 200 kroner online it’ll
cost be $32 and might take four days for the payment to arrive.
That makes zero sense, and cryptocurrencies solve this
problem.”
We are seeing the cryptocurrency ecosystem rapidly evolve as a
result of this, says Khan.
“Two years ago the conversation was very much Silk Road and pizza. Now VCs are investing in risk — we have
Andreessen Horowitz, Fred Wilson and Redpoint. This is a sector
everyone knows is going to get disrupted, and they need to be part
of that journey. Companies like Bit Pay were very early, now we
have ecommerce companies starting accepting Bitocin. Amazon has its
own plans on virtual currency.
“People once said the fax machine would never get disrupted,
then we had email. We’ve seen this over and over, and if you have
passion and an appetite for risk, why wouldn’t you? I don’t want to
turn around and five years say why wasn’t I part of this.”
We are seeing this interest in the ecosystem spread, as
evidenced by the stories being published by Khan’s own site
Coindesk, which are picked up by the likes of the Wall Street
Journal
and Dow Jones. “Over the last 12 months it’s
much less of Silk Road, and more of Visa setting up a group looking
into cryptocurrencies and Western Union or Ebay looking into
Bitcoin.”
On the question of the legality, or government discomfort with
Bitcoin, Khan points out that the US $100 note is the chosen
currency of the criminal world — it’s what they’ll find in raids,
and its what the CIA drops in bales of cash into Afghanistan.
“They’re not sending smartphones, they were sending US dollars.”
Recently, the US government sold off the 30,000 Bitcoin it seized
during the Silk Road shutdown. Khan points, “I don’t remember the
US government selling cocaine seized from raids, so you can’t say
it’s illegal and shouldn’t be allowed.”
The government is always going to have some issues because when
you don’t understand something, you get fearful of it.”
The cost those 30,000 bitcoins sold for, is evidence enough that
there is something attractive here for investors — Khan says the
coins, currently priced at $650 each, went for above that
value.
We need to stop holding on to traditional money as though it is
not broken. “I’m guessing there are laser printers out there
devaluing that money quicker than the paper can be printed,” Khan
said.
“We know change is coming. Regulation will not shut this down,
it might just prolong this little a bit. You need to embrace
cryptocurrenices and try to understand why the core technology
could help what you’re doing.”

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