In October, Timothy B. Lee (@BinaryBits) summed up Bitcoin with the statement “It’ll be difficult to pull out of that kind of tailspin”. Today though he writes about “Bitcoin’s Comeback”. Excerpts:
At a minimum it looks like the currency will still be around in 2012.
The longer Bitcoins continue to exist, the more confidence people will have in its continued existence.
There’s no Bitcoin Inc. to compete directly with Western Union, but [those investing in] Bitcoins can be thought of as shareholders in a decentralized Western Union alternative.
Jon Matonis (@JonMatonis) describes how Bitcoin can come to the rescue for Somalis in Minnesota who have been barred from making the small regular transfers to their family members in Africa. Excerpts:
“Instead of trying to comply [with regulations], [banks] are electing to opt out so as not to encounter heavy federal fines. It sure would be nice if the world had a decentralized peer-to-peer digital currency that could be transferred to mobile devices in a secure fashion.”
“If it hasn’t happened already, a savvy merchant in Somalia will start accepting bitcoin for Somali shillings. Or a traditional currency exchange dealer could get in on the action too — the spreads are certainly there.”
“As a distributed network, bitcoin possesses the capability to route around interference and disruption. In fact, this was a key design consideration as resiliency has grown to become an imperative for privacy-enhancing electronic cash.”
SWIFT White Paper on Mobile Payments
Interbank messaging network SWIFT put out a white paper identifying opportunity for its bank industry customers to build and deploy regional and global mobile payments technology and services. The paper includes the photo used in this post which surveys the innovators in the mobile payments space. Excerpts from the paper:
Out of a world population of 7 billion, over 5 billion or 70% have a mobile phone, whereas only 2 billion or 30% have a bank account. Take India: on a population of 1.2 billion over 800 million have a mobile phone and only 250 million have a bank account.
Deploying a mobile payments service is not straightforward as legal frameworks across countries are not harmonised.
So where is the next big opportunity? [Multiple factors including] population size (to develop a significant business), lead us for example to Nigeria, India, Pakistan, Brazil, Mexico and Colombia.
Not one single bank or mobile network operator covers the whole world, so there is a need for cooperation and partnerships.
Today, most mobile payments services are closed-loop systems whereby one customer cannot send a payment to a customer in another system, even within one country.
Because Bitcoin doesn’t need to be introduced to a country by a bank or mobile network operator and needs no government sponsor or prior approval it can start to become entrenched, organically. Bitcoin doesn’t need a bilateral agreement to have interconnectivity between the sender in one country and the recipient in another. Bitcoin used for mobile payments doesn’t need multiple variants, each different due to specific requirements before each target nation would grant approval.
Bitcoin is the one-size-fits-all mobile payments system that clears all the hurdles this SWIFT research and analysis presents.
Of course, Bitcoin yet has hurdles of its own to surpass. Apple yet once again has removed Blockchain for iPhone from App Store and referred the app’s developer to their legal department. There are technical issues relating to growth and griefing from cyberattackers that have plagued even this third-party provider’s service for its Android users over the past few weeks.
Additionally, unless the mobile network providers enter the bitcoin exchange business, the need exists to develop local Bitcoin exchanges in each area — something that would probably need to find its start in the unlikeliest of places before catching on elsewhere.
Bitcoin may first need to prove itself with at least one specific use as a currency or payment method before adoption would spread to parts of the world where Bitcoin is yet an unknown.
Guardian - Remittances Around The World
The photo above accompanies a Guardian article featuring an interactive map that shows the remittance flows for the particular nation selected.
The ability to explore the map on a nation-by-nation basis (as shown above for Peru) is available only after clicking the “Leave Tour” button from the application.
Bitcoin, as a decentralized digital currency with no authorative source is beginning to gain some traction as a remittance payment method. Bitcoins are becoming fairly easy to acquire inexpensively in many areas (e.g., U.S., UK, Canada, and Europe) which correspond to areas where much of the remittance flows originate.
Since most remittance recipients use the funds for paying expenses and shopping, bitcoins aren’t (yet) quite useful to them and there are still just few methods to cash out bitcoins with a local exchanger. These methods are improving with independent exchange agents listed on LocalBitcoins.com now providing cash-out service in over 700 cities worldwide and the upcoming launch of BitcoinWireless which will let bitcoins be used to pay for mobiile phone service in more than 100 countries.
Bitcoin may have an even bigger impact for those who currently send remittances by enabling investment capital to flow quickly and cheaply to where the opportunities lie. If there is more work near a worker’s home then there is less need for that worker to live away from the family in order to provide for them. Knowledge workers are already the first to be able to work for a foreign employer without having to live abroad. And since bitcoin payments have no concept of borders, the employer can sent bitcoins to the employee at a lesser cost to both employer and employee. Increasingly these knowledge workers with foreign employers are requesting that their compensation be paid in bitcoins, and employers are increasingly willing to oblige.