Why Bitcoin Will Change the World

bitcoin

What do you think of Bitcoin?” is a question I get asked a LOT lately. As recently as this morning, on a call about a totally different topic, the conversation led to a discussion on Virtual Currency, which brought up Bitcoin.  While it’s not a new phenomenon, Bitcoin’s role in today’s financial services industry has become pivotal for a number of reasons:

  • Bitcoin is to virtual currency what TCP/IP was to networking.  Before TCP/IP (the underlining network protocol for the internet) we had networks that couldn’t talk to each other.  Once computers and networks were interconnected, the Internet arrived, applications scaled, usage soared.  Bitcoin offers Virtual Currency interconnectivity.
  • The world is ready for an e-currency.  Globalization, online commerce, new technology – these are the conditions that make a world ripe for an e-currency.  Crowd sourcing and “open systems” are the right ingredients for our first global e-currency.
  • Regulators could try to stop it, but they are better off regulating it.  Bitcoin can enable innovation and at the same time create a tool to fight money laundering.  The regulatory uncertainty will be challenging but temporary.
  • Bitcoin solves important problems like removing friction from online commerce, and enabling participation in mobile commerce by the underserved.  2 billion consumers are coming into the online commerce community in the next 5 years, and with it a large need for increased stability and trust in a currency.

There are downsides to a virtual currency, like instability, the potential for nefarious activity, and diminishing the role of the current banking system – but the world needs a change.

The next few years are about navigating uncertainty. Which players will be important? What is the business model? What will regulators do? The answers to these questions are uncertain and will be for the next few years. Those who want to be involved with Bitcoin now need to be prepared to navigate this uncertainty.

At a local meetup in Silicon Valley a few weeks ago I got the chance to experience the Bitcoin community in person.  A diverse group of 400+ people from around the world who were excited, committed, and cooperating.  These are the builders, and like the underserved, this group grows in size everyday.

There is a need, and I believe a small group of dedicated people can change the world.

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About Carol Realini

Serial Entrepreneur, Mobile Payments and Banking Pioneer, Author, Board Member Carol Realini is a successful Silicon Valley executive and expert in financial service innovation. She has worked with leading financial institutions including MasterCard and Citi, as well as numerous multinational and regional banks, to change the way banking is conducted. In 2011, as a Technology Pioneer attending the World Economic Forum, she led discussions on alternative banking at their meeting in Davos. A serial entrepreneur, she has been recognized as one of the 50 Top Women in Technology by Corporate Board Member magazine. Carol is a huge believer in the potential of mobile banking and payments to create financial inclusion - where everyone with a mobile phone has access to affordable financial services that empower their life and work. To understand Carol's vision please watch the WEF video (click on the weforum.org link below). Carol also mentors entrepreneurs providing wisdom and lessons learned from her four successful startup experiences.
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2 Responses to Why Bitcoin Will Change the World

  1. Governments will do everything they can to maintain their monopoly on money for reasons of: taxation (both sales tax and FX gains); inflation (governments make money and reduce debt burden by inflating their currencies, but Bitcoin is inherently a deflationary currency since the number of bitcoins is capped); seigniorage (the government can make a piece of linen, paper if you prefer, worth $100 by simply printing on it…they won’t let go of that). They will use the taxation issues as well as money laundering as rationale to track all users of each coin (they maintain a trail of ownership since they are not self-validating) and demand that the prior owners PROVE how much they made in capital gains and that they did not use that bitcoin for nefarious purposes. As soon as bitcoin becomes a threat the various governments will pull out all of the stops to kill it…sadly.

  2. Pingback: Headline News - May 31, 2013 | Ideal Payment Solutions.comIdeal Payment Solutions.com

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