Cryptocurrency meets digital finance and mobile value exchange
by: Manie Eagar
In just two short years cryptocurrency has grown from a hobby project to a multi-billion dollar global digital finance industry. With new competing alternatives and technology advancing beyond simple currency-based payments to all manner of value exchange, financial instruments, smart contracts and blockchain based distributed ledgers, everyone is waking up to the fact that Bitcoin was just the beginning.
Arriving just in time for the great convergence of mobile payments, digital branchless banking and digital-value exchange, Bitcoin, alternative currencies, and digital finance innovations promise a major disruption of global finance.
Originally an outlier technology, the business of Bitcoin, and its broader digital money applications, has now grabbed the attention of all major financial institutions, consumer technologies and regulators all over the world. We will explore the tension between decentralization versus the ‘new channels to market’ play of the various incumbents.
The Bitcoin proposition: In his seminal paper ‘A peer-to-peer electronic cash system; dated November 2008, Satoshi Nakamoto envisaged ‘A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.’
From this simple premise the bitcoin phenomenon has grown in scope (1.5 million current users) and size ($3.4bn market cap) to grab the attention of media headlines worldwide thanks to the infamous MtGox and Silk Road debacles. Bankers and regulators still quote these two factors as the specific reasons that they don’t ‘trust’ bitcoin, confusing business malpractice with the legitimate applications of a highly disruptive financial innovation.
But what is unstoppable is the convergence of two major fintech sectors with that of bitcoin and newer digital currency and blockchain based technologies — the crossroads where Digital Banking and Mobile Transactions meet the Cryptocurrency Protocol(s). Will this be as natural convergence or a collision? What are the implications, opportunities and challenges for fintech startups, entrepreneurs and investors; and established legacy players alike?
Editors Notes: This entry has been submitted to the FINTECH Book, the world’s 1st globally crowd-sourced book on FINTECH. Readers that enjoyed this initial abstract are invited to share and like it so that it may be featured in a longer version that will published in the FINTECH Book due to be released November 2015.