Consumer Benefits of Digital Currency

Jeremy Allaire October 30, 2013

If you’re an individual user of money (e.g. “a consumer”), you would expect to see improvements in the daily utility value of money by using digital currency.  What’s in it for you:

_Lower costs.  _By taking the trillion dollar tax out of the global economy, businesses can both pass along the savings as well as make productive investments.  It remains to be seen exactly how this plays out -- and the war that the incumbents will wage to battle it -- but we’re already seeing evidence of offering customers a price break if they pay with Bitcoin.

_More privacy and security.  _Unlike your credit and debit cards, whose numbers are flying around in the clear and are often subject to theft from online sources, digital currency like Bitcoin are built on public key cryptography, and offer more security and privacy.

_More convenience and power.  _Yes, I know, you think that using cards and PINs and swipes isn’t so bad, what’s the big deal, etc.  This is one of those things that marketers call “latent aspirations” -- it’s something you really want, and you don’t even know it.  No one wanted the iPhone.  No one wanted email or Skype or the Web.  In 1993, these were latent aspirations.  Programmable money is a big deal, and when converged with mobile apps and devices, I think you’re going to be thrilled with the new user experiences with money that are now possible.  Instant and touchless payments will make cards/swipes/PINs feel like an artifact of the last century.

_A secure store of value.  _

This is the one that raises the hairs on a lot of people’s necks, and results in shrieks of disbelief and protests of Ponzi schemes at play.  Impossible, they say.  And this is, from our perspective, a long term bet on the security and stability that is offered by digital currency versus traditional currencies.

This is also a bet on an increasingly multi-polar world (e.g. non US Dollar), with increased globalization of trade and communications, more porous nation-state boundaries, and the desire to establish a global payments and unit of account methodology that can scale to $2.1 quadrillion in economic value, and is not governed by one nation’s central bank, but by global governance structures and open standards and open technology.

But a reasonable criticism of Bitcoin and digital currency as it stands today, in particular with regard to its use as a secure store of value, is the high-levels of volatility, the lack of liquidity and the lack of market makers.  But these are all symptoms of being a young new trade and marketplace, and can be addressed within a reasonable time horizon; in fact, these needs are themselves enormous market opportunities for the right long-term investors and market participants.

Next read:  What's in it for Business and Government?

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