Bitcoin Should Be Overhauled, Says Circle CEO

April 11, 2014 By: Jenn Roberts Ma

Circle Internet Financial CEO Jeremy Allaire shared a sweeping vision to change bitcoin at the opening of the second annual Inside Bitcoin New York. The conference, which attracted more than 2,000 bitcoin enthusiasts, is a high-profile platform for bitcoin thought leaders.

Allaire, a prominent bitcoin backer, challenged many of bitcoin’s fundamental protocols—including its anonymous transactions.

Bitcoin is a decentralized digital currency that many government and industry leaders claim facilitates illegal activity. Because bitcoin transactions occur anonymously, the identities of criminals who use it are protected.

Allaire wants the currency to survive because he thinks it offers important marketplace advantages. For example, the currency lowers costs for merchants by eliminating transaction fees while improving consumer security and privacy. The start-up Circle, which he founded, is developing payment processing technology to help bitcoin expand its reach.

In order for bitcoin to survive, Allaire said a number of basic practices need to change. His recommendations included ending anonymous transactions on bitcoin.

“[One] critical component to ultimate mainstream acceptance is the ability to assign identities to transactions… while still maintaining financial privacy and even anonymity but enabling law enforcement to chase criminal actors that use these platforms,” he said.

Such a stance is opposed by many bitcoin enthusiasts who want to maintain users’ anonymity, a key feature of the currency.

Allaire also suggested governments and central banks become involved in managing bitcoin—even recommending that governments establish treaties to regulate bitcoin mining cartels.

“Bitcoin needs greater levels of governance around it,” Allaire asserted. “I do not believe this industry will grow without collaboration from governments around the world.”

Allaire’s remarks highlight major philosophical differences among the international bitcoin community, who all want the digital currency to succeed, but face a rift in the implementation and even necessity of regulation.

Ultimately, the future of digital currency may depend on its ability to reconcile opposing viewpoints with a unified strategy.