Bitcoin is now a fruitful area for PhD research, many of which highlight Bitcoin’s seismic changes to the world of finance. Bitcoin isn’t poised to just take on gold, it also offers a complete overhaul of the 500 Billion (per year) remittance market. But perhaps the clincher is that with low transaction fees, quick confirmations and no charge-backs, bitcoin could toss Paypal, Square, Dwolla, MasterCard and Visa into their faddish dustbin. People really do think with their pockets and saving money never goes out of style. Bitcoin’s adopters and proponents are programmers, VCs and many recent millionaires who prefer to talk about ‘colored coins’ ability to replace all of Wall Street (yes everything they do) with a protocol.
Would you trust Google or Visa to keep their word as far as the value of their currency goes?
We already fell for that scam about 100 years ago but instead of Google or Visa it was another big company at the time called the Federal Reserve. They locked their currency to a rate based on gold. That went away and now our dollar is worth about 1% what it was valued at initially. The point of mining is that there is no central authority to control the value or the make up of the currency. It is all based upon math, set in stone when the first bitcoin was created.
The ability to know that the consumer cannot take his money back up to six months after payment allows for many more services to be provided that could not exist before, after one hour it is mathematically impossible for a consumer to retract his payment. For merchants that have to ship a product or take time to send the purchased good they usually use an escrow service that charges a minimal fee (less than credit cards) which provides the same peace of mind.
Bitcoin holds great promise for a variety of reasons. Let’s set aside the volatile value for a minute. We all believe that in the near future people will be able to use a smartphone and pay for purchases right?
Visa and Mastercard charge transaction fees for each purchase. Bitcoin doesn’t. If you are paying via your smartphone then what’s the difference if its tied to a Visa card or a bitcoin account? In short, Bitcoin allows for seamless transfers of currency between two people or a person and a merchant. It can’t be stopped, frozen or taxed. If you have internet access you are free to accept payments or make payments via bitcoin with no need for licensing fees, transaction fees, merchant accounts, payment machines, bank accounts, local taxes, government regulations etc. You get the drift.
With Bitcoin the money is yours and no one can take it from you and unlike gold you can transfer it to someone on the other side of the planet instantly and without any transaction fees. I am excited to see where this goes as it develops.