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Bitcoin tips for the smart investor provided at Disrupt NY 2014 event

Photo by Brian Ach

TechCrunch is holding its annual technology conference, TechCrunch Disrupt NY 2014 through Tuesday at the Manhattan Center. Speakers throughout the industry will be on panel discussions posted on the TechCrunch website. Yesterday, Peter Smith, COO, of and Susan Athey, Professor of Economics at Stanford University took the stage at Disrupt NY 2014 yesterday to talk about the state of bitcoin on the panel event titled: "Magical Internet Currency: Navigating Bitcoin".

Over last few months there have been F.B.I. arrests of major exchanges and the total collapse of Mt. Gox leading to volatility in the value of Bitcoin. The question before the experts was asked: Can Bitcoin weather the events? Smith and Athey focused on the lessons learned from recent events and how not to buy and hold bitcoin.

Smith pointed out that when investors sent bitcoins to Mt.Gox, they moved into a master account and that was the how “not to” have a bitcoin account. The investors relied upon the centralized trust and management responsibilities of CEO Mark Karpeles. How could anyone place fiduciary trust into Karpeles without a system of accounting audit and other transparent procedures in place?

He questioned Xapo and its centralized position as its business model as a question on security for the investor. Smith proceeded to compare what he called the two buckets, centralized management or self-control, pointed to the options of no control to control. Athey and Smith both agreed upon the attention to control and avoiding a centralized pool.

Blockchain COO, Smith, went on in his explanation of the philosophy for management is that a company, such as, Blockchain, provides security and transparency to your bitcoin management with its open-source software. The bitcoin investor has their private keys. This is the investor’s control to protecting and accounting for their wallet. Blockchain cannot view a wallet or watch the exchange in and out of the wallet. It is private to the account holder.

Susan Athey, Professor of Economics at Stanford Management School of Business, currently focuses her research on the design of auction-based marketplaces and the economics of the internet, primarily on online advertising and the economics of the news media. She weighed in on the flags that Mt.Gox sent up with its freezes placed on withdrawals. She was not surprised at the failure of the exchange due to its centralized process of keeping bitcoin in that manner.

Athey pointed out that valuation was important when a transaction to buy and sell bitcoin for liquidation was in process. Otherwise she viewed bitcoin in investment holding and applied the valuation tracking to it as such.

Moderator Kim-Mai Cutler asked whether bitcoin startups should get together and create a bitcoin association. Smith supported the job that the Bitcoin Foundation has been doing well in the area of money laundering activities. He believes that the Foundation needs to focus on another area and that is one of consumer protection. Education is an assistance to help the consumer. Smith would like to see the Foundation take a more active role in regulation support, also.

Smith updated questions regarding Blockchain. It has a positive revenue stream that supports a team of twenty and has 1.6 million users. Both Smith and Athey concluded that Bitcoin is here to stay and will continue to impact the world of cryptocurrency.

The Disrupt NY 2014 event will continue through Tuesday and information is found on the TechCrunch website.

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