Bitcoin: Bubble or Brainwave? I just can't decide.

Bitcoin is a new kind of currency denoted by virtual or digital tokens rather than physical coins/notes.   Its value is determined by how much people are willing to exchange for it.  Supported by peer-to-peer technology and cryptography, to process Bitcoin transactions, a procedure called "mining" must take place, which involves a computer solving an algorithm. 

There are essentially four parties involved in the Bitcoin economy:

-Consumers who are paying with Bitcoin

-‘Miners’ who process and validate Bitcoin transactions via computers

-Merchants who accept Bitcoin

-Entrepreneurs/developers building new products and services with Bitcoin.

I found a really good (short) video explanation here: https://www.youtube.com/watch?v=Um63OQz3bjo

Every day more and more people are agreeing to accept Bitcoin in transactions.  In fact, there are currently about 11 million Bitcoins in existence.

There are very divided views out there with the promoters saying that Bitcoin will revolutionise the world of payments in much the same way as the internet has fundamentally changed how consumers, and people, operate.  Marc Andreessen, who’s venture capital firm, Andreessen Horowitz, has invested just under $50 million in Bitcoin-related start-ups is massively excited about the potential of this digital currency.  In a recent NY Times piece he wrote: “Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer.”

Meanwhile in Cyprus, in the University of Nicosia (UNic), you can now pay for university tuition in Bitcoins! According to the university, those who wish to pay tuition fees in Bitcoins will be able to use an online merchant processing service or pay directly to the finance office.

Social Gaming company Zynga has also announced it’s going to test Bitcoin payments for its in-game purchases with popular games like Farmville 2, CastleVille and CityVille.

Merchants and manufacturers are also embracing this new currency.  According to Reuters, the Bitcoin ATM manufacturer Lamassu is reportedly seeing an increase in orders for its service -it has sold 120 of its ATMs worldwide since it opened for business, shipping machines to Canada, Russia, and other countries.




Similarly a Bitcoin storage service has launched in London.  Insured against the loss and theft of the digital currency, Elliptic Vault uses "deep cold storage", where private encrypted keys to Bitcoins are stored on offline servers in a secure location. Unlike money stored in a bank, Bitcoins are not insured and there is no way of retrieving them once they are gone.

Much like the Internet, there is no one government, regulator or private entity behind Bitcoin and so governments across the world are now scrambling around deciding how to legislate for this new currency.

In some cases, there has been an outright ban, namely in China, where the largest online marketplace, Alibaba Group's Taobao, said it would ban virtual currencies.  In December, the country's central bank ordered financial institutions to halt Bitcoin-related services and products.

Singapore, on the other hand, has become one of the first countries to issue tax guidance for Bitcoin businesses.  It is also monitoring transactions to detect any illicit financing.

In the US, however, it has been received more positively with Overstock.com becoming one of the first major online retailers to accept Bitcoin.

There is a huge amount of hype about this new innovation, not all of it positive.  In particular questions focusing on transparency and control.  Who controls the flow of this new currency? Who is making money from the hype?   Is it a pyramid scheme?

Let’s face it; Bitcoin has absolutely no track record.  You certainly can’t buy your dinner with it!  The reason cash and cards work is because they work so well and are easy cash has been around for thousands of years and will last because it does a simple job simply.  It is trusted and easily transferable.  

As I write this I am coming to conclusion that I should not be taken in by the hype and take a jaundiced view of this now.  I think it will be a crash but I may well be so wrong! 

It’s hard to see what new value it is bringing or big problems it is solving ... or am I a dinosaur here?  Time will tell.

Sources: www.pymnts.com, www.bbc.co.uk, http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/

Savvy Selection of Payment Conferences in 2014!

This time of year is always conducive to planning and goal-setting for the year ahead.  For me this involves a review of all the conference notifications and invites.  There seems to be so many for the payments and cards industry and it can be overwhelming trying to select the most relevant ones for your business.

Looking at the range of payment conferences across Europe and the US, it’s a worthwhile exercise to review them and figure out which ones would be most beneficial to attend.  Unless you’re learning new topics, networking with relevant industry people or expanding your knowledge/business prospects in some way then there’s little point in signing up for them!

Depending on the business topics you are dealing with, you can pick up a lot of info at the right event and with careful planning it doesn’t have to set you back too much cost-wise.  Retail expos are also usually free or low cost and you can pick up lots of useful insights attending the specialist mini seminars and simply talking to the exhibitors. 

For me personally in 2013, there were two stand-outs - Payments Innovation Harvard in Boston and Cartes in Paris.

At the Harvard event, I gained fantastic insight into US developments and enjoyed high quality talks from key industry speakers including Al Gore, who spoke about the concept of the Global Mind (what happens when technology connects people and information rendering us fairly inseparable).  This is now coming up again next month and I would strongly recommend it. At Cartes, I learnt a huge amount about the latest trends and innovations in mobile payment, NFC, biometrics, M2M and related businesses.  Overall there was a great mix of diverse sessions, which gave me great exposure to the unique challenges and opportunities facing the industry.  

Dinah Tobias coordinates the Payment Forward Networking forum in London, which brings together senior professionals from across the payments industry on a regular basis.  Their events give industry specialists the chance to discuss issues affecting our industry through a series of debates, discussions and networking events.  A recent data security event at Vendorcom was very insightful and provided an up-to-date view on this pertinent issue.  Looking at the 2014 calendar there are a range of topical debates taking place in London, which are certainly worth checking out.  Likewise the payments regulation event, also in London, this coming April is very comprehensive looking and probably well worth attending.

Throughout Europe there are a few larger events scheduled for 2014, the first of which is the Merchant Payments Ecosystem conference in February, taking place in Berlin which is set to be a key event for those of us researching the evolution and impact of payment systems worldwide. This is one I am really looking forward to attending.

With mobile payments a hot topic in the industry, the number of events dealing with this area have increased recently.  I’ve attended a few and find that the same issues are re-hashed and it’s tricky to come across something new or useful.  I’d advise doing some research on the speakers and companies attending to make sure it’s relevant for your business interests, as these tend to be pretty expensive too.

You don’t have to give up a whole day or week to gain something.  I was at a variety of short afternoon events last year, for example a recent Vendercom afternoon.

With clever planning can get you a lot of information, insights and contacts.  I also find that taking a day or two out from grind helps with thinking and I always come back with clearer thoughts on my own business priorities.

The key lies in setting out your objectives and what you want to achieve from the events.  Early bird offers, or attending some of the mini sessions can save money and ensure you get the most from your budget for this type of activity.  In fact where possible, never pay full price. Either book early and take discounts or book late and haggle!

My immediate priority is to get organized for Money2020 in November in Las Vegas.  I’m watching closely on Twitter to see all their announcements and discounts –well worth following them on @money2020!   It’s in its third year and is considered by all accounts to be the most professional, innovative and forward-thinking event for our industry.  Anil and the team run a fantastic show and they’re expecting around 4500 attendees from more than 1750 companies for 2014, which will make for an excellent networking and learning opportunity.