According to the official Bitcoin protocol, the number of BTC (the Bitcoin currency symbol) that can ever be mined into existence is capped at 21 million BTC. That's it. Currently, just under 13 million are in circulation. Because of its finite supply, Bitcoin proponents believe that each BTC can only rise in value - perhaps to as high as $1 million. Bitcoin's critics, on the other hand, worry that Bitcoin's borderless nature make it the perfect vehicle for shady business ventures to flout international trade law and embargoes. To help shed light on the matter, Investopedia interviewed Gil Luria, Managing Director at the Los Angeles, Ca.-based investment bank Wedbush Securities, the first investment bank in the U.S. to accept Bitcoin as payment for fees. (Need a basic Bitcoin explainer? See our video, "What is Bitcoin?")

Q: I've heard you say that one day 1 BTC could be worth $1 million. Do you want to expound on that?

A: Haha, I've qualified that statement a number of times. If Bitcoin lives up to its potential and becomes the working capital of international trade, instead of countries and companies sitting on yen, U.S. dollars, Swiss francs, they could just use Bitcoin for cross-border transactions. It would be far more efficient. If that were to happen, Bitcoin would be taking $10 trillion of foreign currency that sits in multinational companies. If that were the case, each Bitcoin could be worth $1 million. The probability of that happening would be very low but it is possible.

Q: In that scenario, wouldn't Bitcoin then be co-opted entirely by sovereigns?

A: I don’t think so. Bitcoin won't replace sovereign fiat currency anytime soon, but it will be there to supplement sovereign currencies. You have a lot of cross exchange rates. Bitcoin could be the efficient go-between for all these currencies. You wouldn't need to rely on a handful of banks that extract extraordinarily high fees for these transactions.

Q: Would Bitcoin allow corporations to bypass embargoes? Could shady corporations use Bitcoin to build hotel chains in Cuba or, erm, North Korea?

A: No, because governments still have control over the infrastructure. Countries would have oversight over onramps. In the U.S., the most popular onramp is Coinbase, which reports any suspicious activity to the government. There’s going to be a mainstream infrastructure that gets built that is fully regulated and operates above board.

But there is a parallel infrastructure that tries to remain outside the regulatory infrastructure. Blockchain is an example that. They try to make payments outside regular channels. No one is going out of their way to shut that down. Blockchain has no country, no bank accounts, and does no business in any currency but bitcoin. They are a very unique and fascinating organization.

Q: So is Bitcoin a currency, a type of property, a commodity, a security?

A: Yes to all of those. The answer is that it is unlike any financial instrument we’ve ever seen. To start, it's equity in a payment network. Bitcoin miners get paid in order to contribute computing power to the network.

If Satoshi Nakamoto [founder of Bitcoin], whoever he or she may be, had approached a VC firm and said, I want $500 million to build a next-generation payment network, no one would have taken him seriously. Instead, the white paper said, they way I can build a network without shelling out money up front is to crowdfund it. To get people to invest in the power of this network by getting paid in equity in the network.

Bitcoin also looks like a currency. It could also function as a safe haven currency for countries where currency gets devalued by inflation. That, too, is because it’s equity in something that really is not cyclical, not correlated with the rest of the economy. (See our article on "The Easy Way to Determine Bitcoin's Fair Value: A DIY Guide.")

It's an interesting alternative asset. People invest in gold because they have no faith in the monetary system. Well, Bitcoin has some of those same features. Again, that’s a side effect of what this technology creates. First and foremost, were talking about equity in a transaction network.

Q: Was the IRS virtual currency tax guide, issued in March 2014, the shot heard around the world in terms of Bitcoin coming into mainstream acceptance?

A: No, I'd go back a year when FINCEN [The Financial Crimes Enforcement Network), when put out a report [in March 2013] saying they would regulate Bitcoin like any other money business. The reason that was the watershed moment is that, up until then, many people believed Bitcoin was inherently illegal and that governments would forcefully shut it down when it saw what it could do. The fact that the organization responsible for preventing terrorist financing said we see a legitimate use for this, that changed my mind and a lot of other people's mind that Bitcoin can exist within the mainstream economy.

This interview has been edited for length and clarity.

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