October 30, 2013
What's in it for Business and Government?
What’s in it for businesses?
In short, more money, which means either more profits or improved ability to invest and compete and grow.
Bitcoin holds the promise of nearly 0% transaction fees, which adds up to a lot of savings for the average small or medium business. At a time when banks aren’t making a lot of loans, and interest rates are stuck near 0, every dollar, or should I say, Bitcoin, counts a lot to a business’s top or bottom line.
It also holds the promise of more security and hopefully less fraud. “Crypto Currencies” were created by people who deeply believed in a human right to privacy and security, and the result is that merchants know that they will get paid, nearly instantly, and don’t need to store vulnerable and sensitive personal financial information. When you use your credit or debit card online, you are essentially sending copies of the keys to your bank account to everyone you do business with. It’s totally insane. Really smart people have been thinking about ways to clean up this mess, and digital currency is part of the solution.
What’s in it for governments?
At first blush, most assume that governments will be threatened by Bitcoin and digital currency, that it undermines one of their raison d'etre, which is to be the sole supplier and manager of currency within their sovereign national boundaries. This early modern concept has certainly proven the test of time, but after expensive lessons in WWI and WWII, we’ve thankfully moved towards more global integration and coordination on our systems of monetary policy. Indeed, if it wasn’t for the tight coordination and joint policy making of the G20, the Bank of International Settlements and the IMF during 2008, 2009 and 2010, we might be facing a very different world.
At a more concrete level, if there are real and deep savings to be had in the infrastructure and products that enable payments and money transfer, that means more money for consumers to spend and save, and businesses to invest. At a time when governments globally are struggling to balance their budgets, supporting and driving fundamental economic innovation will generate a transfer of economic value from an unproductive use (bank industry profits and balance sheets) to productive use in the real economy, which can help to drive growth.
People also make a lot of noise about Bitcoin and anonymity and how it’s law enforcement’s worst nightmare in terms of criminal uses and money laundering. These are legitimate fears and concerns, but they are overblown. Progressive governments are already taking the right first steps, and ensuring that digital currency operators are classified as “Money Services Businesses”. These MSBs are required by law to take significant precaution in protecting consumers identity and money from fraud, while also ensuring that it is difficult for criminals and bad actors to use the system without detection.
Our hope and belief is that there is a real opportunity for the global digital currency ecosystem to work closely with governments and banks around the world to figure out the best ways to protect consumers and prevent fraud and criminal activity from operating easily on the network.
Next read: The Bitcoin Movement and Developer Adoption