By Vanessa Drucker, Fundweb
Economist Rudi Dornbush once impressed his former student, Larry Summers, with an unforgettable aphorism: “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”
Summers, who subsequently grew up to become US treasury secretary and president of Harvard University, often quotes his professor, sometimes in the context of the financial crisis.
Last week he trotted out those words again, with reference to Bitcoin and its potential applications. We had gathered at Wall Street’s Museum of Finance, for a “fireside chat,” featuring Summers and a panel discussion.
To illustrate speed of adoption, Summers mentioned widespread internet available in hotels or WiFi on airplanes, both a rarity only a few years ago. Bitcoin could likewise take off, assuming that it is regulated and subject to sufficient safeguards to inspire public trust. Summers has described Bitcoin’s potential before now, citing the need for “secure global stores of value” and the financial system’s “substantial inefficiency.”
The panel picked up the thread, to explore viable applications. One overarching theme emerged, that Bitcoin’s use as a currency is secondary its function as a platform or protocol (like http or smpt). It can’t compete with traditional currencies, which trade over $5trn (£3.25trn) each day, but can perform a disruptive and transformative role...