10 Jun Cryptocurrency Bitcoin: Disruption, challenges and opportunities
Cryptocurrencies such as Bitcoin are a hot topic in the financial industry. Looking specifically at the purpose of cryptocurrencies for making payments, this paper aims to illustrate the key challenges that cryptocurrencies must overcome to achieve widespread customer adoption, the major risks regarding cryptocurrencies, when and how cryptocurrencies and their service providers will be regulated, in their current state what are the killer apps for cryptocurrencies, and the more fundamental issues cryptocurrencies must address.
In conclusion, while Bitcoin may not replace traditional and new payment methods to become a dominant alternative in the short term, banks should look at its underlying technology as a potential generic new way to transfer ownership of value in the longer term.
Every day, new Bitcoin startups are announced in the press, and an increasing number of businesses are reported to accept it as a means of payment. Bitcoin prices are reported on Bloomberg and Thomson Reuters. The btc.com domain name recently sold for US$1.1 million.
Payments industry players are closely watching these developments, because cryptocurrencies have the potential to disrupt and transform the existing global financial infrastructure. Invented as ‘a peer-to-peer version of electronic cash (that) allows online payments to be sent directly from one party to another without going through a financial institution’, Bitcoin is considered by its supporters to be a faster, cheaper and more convenient alternative to other payment mechanisms such as sending payments via banks, transferring money via money transfer operators or buying goods and services over the internet, using a credit card.
More critical commentators believe that cryptocurrencies such as Bitcoin are over-hyped, that their potential is based on pure speculation, and that it is an insufficiently regulated payment channel, which is used for gambling or illegal purposes such as buying drugs or money laundering.
Read the complete report of Wim Raymakers journal here
