In April, the M.I.T. Media Lab announced its Digital Currency Initiative, which is aimed at encouraging research into and discussions about digital currencies. The impetus for the initiative came from Joi Ito, the Media Lab’s director, who had previously expressed his belief in the importance of currencies like Bitcoin and the need for a neutral organization that can coordinate the discussion of technical issues and development of the underlying protocols. Last week, Ito participated in a Reddit AMA session in which, among other things, he explained how best to keep governments from over-regulating Bitcoin and other digital currencies.
Governments need to be included
While one of the motivations behind the development of digital currencies is to bypass government involvement in financial transactions, Ito feels that the best way to minimize government meddling is to actually give it a voice in the development process.
“I'm not sure that we need an ICANN for Bitcoin, but I think that what WOULD be good is some sort of way for all of the governments to voice their concerns and then become comfortable with how the community interprets their concern,” he responded to one participant.
In response to another question about regulation Ito wrote “We don't need government to regulate. They just will. ... if we want Bitcoin to be widely adopted by people around the world, we need to make governments comfortable so that they don't over regulate. Otherwise, it will become a sort of underground thing that is useful for only those people savvy or intent enough to use it... sort of like Tor Project.”
Privacy is important
When asked his opinion about the importance of privacy when using digital currencies, Ito suggested that lack of privacy is a problem with Bitcoin, which makes all transactions public, while emphasizing that the solution would not be simple.
“Bitcoin isn’t private,” Ito wrote. “Financial privacy is really important. In the US, many think of privacy as a means for terrorists to hide, but in countries with governments that do not have an open society it is a powerful tool for the citizens to be able to protect their ability to dissent and have freedoms that we take for granted. I’m excited about the potential for technology like ZeroCash to revolutionize this space. The tricky part of any global protocol or network is that anything we do in one country ripples across the world and has unintended consequences. The key is balancing the needs of people in a huge variety of environments.”
During the AMA, Ito also addressed some other Bitcoin-specific questions, such as whether the block size should be increased to improve scalability (he took a neutral stance) and how much Bitcoin he personally owns (about $200 worth, just enough to “pay for things and mess around,” he wrote). For anybody interested in the Media Lab in general, and digital currency in particular, Ito’s AMA is well worth the read.