Is bitcoin really the future of payments?


There’s no doubt that virtual currencies have grown over the last few years, digital and mobile wallets are providing platforms to take new currencies mainstream.

Bitcoin has captured the attention and imagination of the tech community at large over the past few years and its momentum shows no sign of slowing. We’re seeing more and more stories hitting the headlines of big value purchases using Bitcoin. There’s no doubt it’s a currency gathering pace and beginning to catch the interest of financial institutions and payment providers.

Ahead of his presentation at the Future of Digital Mobile Payments, I caught up with Mat Holroyd, the founder of BitPiggy, a fixed rate exchange for Bitcoin. We spoke about how Bitcoin has the potential to tap into new markets and how virtual currencies are going to be central to the payments landscape in the future.

How’s the Bitcoin landscape been evolving? Where does BitPiggy come in?

The businesses surrounding Bitcoin were in the beginning largely trading and mining focused, with a trickle of retail merchants who accept Bitcoin showing up continuously over time. As merchants and interest has grown, businesses that copy what you see in the finance and money world have started to show up. For example, Bitcoin based businesses that perform similar roles to PayPal and banks. As interest has grown further, entrepreneurs are gravitating towards copying the big businesses that have been successful in the non-Bitcoin economy, such as Amazon and eBay.

BitPiggy is a simple fixed rate exchange for Bitcoin, mimicking the kind of service you get from little corner store currency exchange (except all online). From that it has morphed into services like Bitcoin-related consulting and general IT support (like email), which can be paid with currency or Bitcoin. A new area I’m getting involved with is offering publication services for developers in countries with strict capital controls. Developers can get paid in Bitcoin as opposed to expensive alternatives. I also tried to launch a Bitcoin-backed debit card, but was pushed back by the regulators.

How do you think Bitcoin can start to break out of its niche audience, where do the opportunities lie?

One of the key markets where decentralized virtual currencies could see huge wide adoptance is among the world’s unbanked people who nevertheless own a smart phone. Statistics vary but something like 50 to 70% of the world’s population does not have a bank account, and of those billions of people, large numbers of them (e.g. in Africa) have smart phones.

In addition, there are compelling reasons for people who have traditional bank accounts to use Bitcoin.

There’s fluctuating value with Bitcoin – do you think that puts businesses off?

Sure. Bitcoin is very new, and like any new technology (or even new money for that matter);there is risk in getting involved early. That said, there are services to reduce risk for retail merchants, as an example who are interested in accepting Bitcoin as payment but don’t want to hold onto Bitcoin.

Where can the benefits really be seen for using Bitcoin over other forms of currency?

Bitcoin has several aspects that make it compelling compared to national currencies. Probably the biggest one is that Bitcoin is decentralized, meaning that anyone can use it without having to get approval first and it is not possible for anyone to prevent anyone from doing what they want with their money. There are no forms to fill out like with a traditional bank account, there are no capital controls, there no age requirements, no country restrictions, no address requirements. Basically no requirements besides a computer or smart phone.

Another benefit of Bitcoin is the low inflationary nature of the money supply, which should cause price deflation over time, like gold.

What’s the future, where’s your focus from here to get the buy in of a pretty tech savvy Australia?

There are many exciting things happening in and around the Bitcoin world. For instance, there are many virtual currencies that are taking the Bitcoin idea and running with it. There are people trying to make Bitcoin more anonymous, and there are people who have taken the decentralized nature of Bitcoin and applying it to things like messaging.

I don’t have much of a focus on Australia per se, as I think there are bigger opportunities overseas. That said, the recent decision by the Reserve Bank of Australia to cut interest rates to historic lows, causing the AUD to drop -5% compared to USD highlights the benefits of a decentralized money like Bitcoin: no one can arbitrarily decide to devalue your money.

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