When Bitcoin Met Congress
"Congress has long been a place where good, disruptive ideas go to die," quipped Rep. Jared Polis.
He was almost 30 minutes into a news conference Tuesday called to show off Robocoin, the "world's first bitcoin ATM." But the Colorado Democrat also relished the opportunity to tease some of his Chicken Little colleagues, who fret that digital currencies could destroy finance as we know it.
Moments earlier, Polis had likely become the first member of Congress to own bitcoin. This was after he somewhat awkwardly interfaced with the Robocoin machine set up in the main hallway of a congressional office building normally reserved for dark suits hustling to and from hearings with a binder in one hand and a not-at-all-ironic Blackberry in the other.
Following some technical glitches, Polis became a digital-wallet-owning member of the cryptocurrency community. After verifying his identity with his phone, a PIN, and his palm veins—"The NSA has all this, right?"—he successfully deposited $10 in cash, a transaction that netted him .02 bitcoin.
".02!" he gleefully shouted in disbelief. "I have .02 bitcoins?"
Bitcoin is the most popular brand of a growing number of digital currencies, which can be swapped for traditional dollars or spent at a growing number of participating online stores and real-world retailers. Its usage has exploded in the past year, increasing by more than 75 percent between July and December.
Its evangelists view it as a quick and innovative form of payment that ducks some of the fees commonly associated with online transactions. Its critics view it as a province of anonymous actors with nefarious intent, such as money laundering or drug trafficking.
But Polis, joined Tuesday by Robocoin CEO Jordan Kelley and cofounder John Russell, wanted to dispel such worries, which can prompt politicians like Sen. Joe Manchin to declare that we need a ban on bitcoin. Attorney General Eric Holder joined the skeptical train Tuesday when he told Congress virtual currencies pose concerns for law-enforcement agencies because they can "conceal illegal activity."
"The currency of choice for those seeking to engage in illicit activity is still cash," Polis said, noting that he had to go through three steps of authentication to use the Robocoin kiosk. When asked about bitcoin's raging volatility and the recent crash of Japan-based exchange Mt. Gox, Polis offered, "On a much greater scale, we saw [the same thing] from AIG."
Robocoin's Kelley, who could easily be mistaken for a surfer and looks a bit like the founder of the charity Invisible Children, used words like "awesome," "cool," and "solid" to describe his product. He proceeded to wax philosophic about the power of bitcoin to liberate.
"Our goal is to bring bitcoin to the 99.99 percent," Kelley said. "The world has much more to benefit with bitcoin than without." The sentiment was echoed by the Bitcoin Foundation's Jim Harper, who stopped by the ceremony to say bitcoin has "the opportunity to uplift people around the world" by providing a reliable money supply to tattered and despotic countries that fail to maintain their own.
Then it came time for the smartest guy in the room to talk. There was a palpable sense of anxious excitement when Russell, the bed-headed tech wizard behind Robocoin, approached the podium.
"What makes bitcoin so special?" Russell began. He allowed his question to linger quixotically, as if he was just that moment forming an answer. After ticking off some of bitcoin's more commonly touted virtues, Russell, channelling a Steve Jobs ethos, dove deep.
"We are now able to take technologies that required centralized currencies and make them decentralized," Russell said, eyes widening. "We are seeing it now in currency, but expect to see it a whole new way in the future."
During Russell's musings, Rep. Bob Goodlatte, chairman of the House Judiciary Committee, walked in. A tech aficionado in his own right, the Virginia Republican declined to say whether his panel would hold a hearing on digital currencies, though he showed visible enthusiasm for Robocoin and said he might follow Polis's lead and purchase some bitcoin of his own.
Polis and Goodlatte aren't alone. Though Polis said his fellow lawmakers need to study up on bitcoin, the technology is gaining interest in Congress. Last week, the House Small Business Committee held the chamber's first bitcoin hearing, a follow-up to two hearings convened in the Senate late last year. And Rep. Steve Stockman announced this week he will introduce the Virtual Currency Tax Reform Act, which would allow the IRS to treat bitcoin and its ilk as currency on federal taxes.
But if regulators remain skeptical of bitcoin, so too do its early adopters remain of government interference. Technology needs space to grow and thrive, Russell said Tuesday, likening the current "to legislate or not" debate to one that once swirled around another strange innovation 25 years ago.
"When the Internet was first being invented and first being brought to Congress, it was asked at that period of time if regulators should just wait and see or if they'd want to ban it." Russell said.
"I would encourage them to wait and see."
This article appears in the April 10, 2014 edition of NJ Daily.