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.”
While Bitcoin has had a global presence since its beginning, those in emerging nations such as the BRICs (Brazil, Russia, India and China) have had little access to convenient methods for participating in the Bitcoin economy.
That situation is rapidly changing.
In the past weeks a number of developments are helping to make Bitcoin truly a global digital currency. Following are some highlights.
Of course, these aren’t the only emerging economies seeing bitcoin developments. Trading bitcoins in the Philippines is now offered, BitMarket.co, a market exchange in Colombia, just recently launched. BTC-Direct.fr delivers bitcoins using SMS to mobile users in two dozen countries including Estonia, Lithuania and Montenegro and has announced plans to serve Mexico, South Africa and Morocco soon as well.
Additionally, the range of technologies that bitcoins can be used on is expanding, including making bitcoin usable for those using feature phones. Though Coinapult’s recently launched SMS Wallet can only be used in the U.S. and Canada at present their future plans include global expansion.
While Bitcoin’s mindshare is presently concentrated primarily in developed nations, Bitcoin has a bigger potential to improve the lives for those whose savings are at risk of devaluation through inflation, for those whose payments are made costlier as the result of payment system fees, and most importantly for those whose governments impose restrictions on how their money is used.
It would be an incredibly expensive and risky tactic for a corporation or banking endeavor to try to roll out a financial service globally. Because Bitcoin is not a corporation, nor a bank, nor an agency of any government, nor any formal organization it can thus continue to expand, permeating the BRICs and beyond, organically just as it exists today. This is an expected and natural progression for this currency.
The network effect is starting to take hold and Bitcoin is becoming less of a novel innovation and more like a valued special-purpose tool that uniquely serves specific needs and solves tough problems. In hindsight, it would seem obvious that a digital currency that works like cash (non-reversible, trivial transaction costs, instant settlement) would be no less valued in Mumbai than it is in Memphis.
This value is now being recognized the world over.
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.