Yesterday Wired magazine asked me a few questions for an article they ran this afternoon about Stellar, a new startup (non-profit) in San Francisco: New Digital Currency Aims to Unite Every Money System on Earth

I suspect for brevity they had to boil down everyone’s comments to a few nuggets, which is an unenvious job to have, after all, most readers don’t have time to read hundreds of pages each day.

For those that are interest, here are the comments I provided them:

My interactions with people on the Stellar team has been positive, they are genuinely passionate.

I think the major limitation long term, and this is what Bitcoin startups continually run into, will be establishing relationships in the banking and financial industries as well as complying with whatever digital currency licensing requirements each jurisdiction has.  Those are not going away.  Stripe, its lead investor, has been very successful as a payments processor, but financial relationships take months and years to build — it is not something that can be replicated with a viral link that is upvoted or emailed.

I think the fact that they decided to go with a consensus ledger instead of proof-of-work was a wise but double-edged decision.  On the one hand it avoids the Red Queen treadmill and environmental issues that Bitcoin and its progeny have. And is a vote of confidence in the code base that Jed and his cofounders at Ripple put together.  But on the other hand identity fraud and preventing Sybil attacks are a hard nut to crack for distributing coins; incidentally proof-of-work was one way to resolve that (though not the only way to do so).

For instance, while it is still early on, one challenge they are currently facing is fighting identity abuse.  KYC is essentially done through Facebook, which is clever way to also distribute tokens but is vulnerable to fake accounts from Mechanical Turk; Everett Forth racked up 2 million stellar in one day alone. It’s worth pointing out that this is a problem that Ripple Labs tried to solve with Computing For Good, but botnets abused this faucet and Ripple Labs shut it down at the end of April.

Consumer facing products in retail will be hard to do in the developed world, in the OECD because of the competitive forces from Visa and Mastercard.  It’s very capital intensive and hard to compete against their POS integration and margins (Richard Brown has good article about this hurdle).

Yet, the more competition, the merrier.  Consumers globally will have more choices — the market will end up deciding the best solution and we will all be better off.