Friday, 29 November 2013

Bitcoin; the future of money?




Is Bitcoin a form of digital currency, digital gold, a virtual payment system?  Probably all three though not yet clear but it certainly is a disruptor.

Bitcoin shares many mechanisms of the internet model as do some of the classic disruptors like Areo, Wikipedia, Napster/BitTorrent, Amazon.  In fact it aligns the most, compared to other digital currencies and internet financial instruments like mobile wallets.  It is also the most innovative.  This places it far ahead as the potential disruptor to today’s [traditional] financial instruments and points towards the future of money, payments and of the financial industry.

But it is still raw.  It is highly speculative now probably because it is also in the early phase of its development (bell curve) but it will stabilise when today’s speculative elements are contained, through some regulations perhaps.

Judge it from the prospective of the information age (not industrial) where data is the new commodity - bitcoin is a data-rised currency though very much modelled after gold.  Evaluate it from the new rules of the internet economy.  It is an open and direct method, crowdsourced using the peer-to-peer model.  It shares characteristics of say Lyft’s democratic, egalitarian culture.  It relies on the openness, vastness, borderless, globalness of the internet and uses its connectivity in its business.  Interestingly, like the way the internet infrastructure was designed – indestructible communication system, it is unlikely Bitcoin can be put down.  Even if it does not become a global common currency, widespread use is expected and that alone will pressure the central banks and financial industry to bring down costs for us.  Does this model sound familiar?

Certainly contrarian but perhaps it shouldn't be written off so nonchalantly and like Areo, the establishment and entrenched interests will want to kill it off.  But like many iconic products of the internet, this will prove difficult.  Reducing costs is a greatmotivator.

It is slowly moving towards the mainstream phase.  And then the industry around it will take off.