Once again, Byrne is looking beyond the moment. He argues that bitcoin is an idea that can change more than money. He believes it can change Wall Street too, putting an end to the corruption he has spent so many years fighting. And others agree.
Bitcoin is a currency, like the dollar or the euro, and it’s a money transmitter, like a credit card network or PayPal. But at the most basic level, the worldwide software system that underpins bitcoin is really just a means of instantly verifying that you’ve sent something to someone else. “It allows for the decentralized proof and transfer of ownership,” says Fred Ehrsam, the co-founder of Coinbase, the outfit that handles bitcoin transactions on behalf of Overstock.
‘You would have an instant, frictionless market, while having the added benefit of wiping out a whole parasitic class of society — that is, the whole financial industry’
— Patrick Byrne
Because its ledger of funds is completely public, users always know how much money there is and where it is. That’s one of the reasons Byrne is so attracted to it. He knows that, as with gold, the supply is limited. Governments and banks can’t make more of it. But as Ehrsam points out, the bitcoin framework could also be used for things other than money — like stocks.
“It so happens that the first application of this is payments and money, but it doesn’t have to be,” Ehrsam says. “It could transfer a securities, too.” In other words, it would be feasible to build a bitcoin for the stock market, a system that would quickly, easily, and reliably move securities, a system that would make it clear who owns what at any given time, a system, in other words, that could completely eliminate naked short selling and other schemes like it.
When I toss that idea at Byrne, he tells me that he’s already thought of it, that it could prevent an entire ecosystem of funds and banks from gaming the market. “It’s like you’re reading my mind,” he says. “You would have an instant, frictionless market, while having the added benefit of wiping out a whole parasitic class of society — that is, the whole financial industry.”
It’s an outrageous and ridiculously ambitious idea. But it also makes perfect sense, and it just might happen. The bitcoin software is open source, meaning anyone can make a copy and modify it as they see fit. That includes Patrick Byrne.
Yes, some of the world’s brightest financial minds question whether bitcoin even has a future as a digital currency. That includes no less a name than New York Times columnist and Nobel Prize winning economist Paul Krugman, who says it’s not a reliable store of money, much less a viable way of moving it from place to place. But that doesn’t phase Byrne. He’s been there so many times before, and he typically responds in the same way. “Paul Krugman was great,” Byrne says, “until he went crazy.”