David Yermack is the Albert Fingerhut Professor of Finance and Business Transformation at the NYU Stern School of Business and is the Director of the NYU Pollack Center for Law and Business. He is co-instructor for the NYU course on Bitcoin and Electronic Currencies. His essay “Is Bitcoin a Real Currency?” was published in The Handbook of Digital Currencies (Elsevier, 2015).
Prof. Yermack will be teaching a 2 day intro to digital currency course at NYU Stern on Nov 9-10, 2015. Learn more and apply today!
1. How do you think digital currency is disrupting monetary payment systems?
“Companies in the payment processing industry are worth more than $500 billion, led by the big credit card companies such as Visa, MasterCard, and American Express. The large commercial banks also have significant businesses in international money transfers, and there is a further industry of hardware and software companies such as ATM manufacturers. All of these firms are vulnerable to the new technology underlying digital currency, which brings major innovations to the way that money is tracked, transferred, and secured. You are starting to see the major players try to co-opt this technology before it undermines their business models.”
2. What do you predict is the future of Bitcoin?
“There are about 100,000 Bitcoin transactions every day, and the growth rate is fast. However, the Bitcoin network has too many bottlenecks and delays to handle worldwide commerce on a large scale, and there is no one who has the authority or responsibility to upgrade it. So I think Bitcoin is likely to be displaced by successor digital currencies that build on its more clever aspects. However, it’s not clear that money on a large scale will ever move beyond the control of national governments and be issued by autonomous computer networks, which is what Bitcoin’s creator envisioned. There are too many macroeconomic problems that could occur if a government could not control its own money supply.”
3. What should business leaders to be thinking about in terms of Bitcoin?
“Bitcoin relies on a radical change in information technology known as the “blockchain,” and this can be adapted to handle many business transactions involving property registration, self-executing contracts, derivative securities, and so forth. A lot of organizations are doing research on blockchain applications, and that seems to be where the opportunities lie.”