“Virtual currency could ultimately have a number of benefits for our financial system. It could force the traditional payments community to “up its game” in terms of the speed, affordability, and reliability of financial transactions. I think many consumers – myself included – are perplexed that, in a world where information travels around the globe in a matter of milliseconds, it can often take several days to transfer money to a friend’s bank account.” Benjamin Lawsky, New York State Superintendent of Financial Services Virtual Currency Hearings, January 28-29, 2014
- The history of money is driven by seeking better ways for exchanging products and services. This process often includes applying recent advances in technology. Digital currency represents such a technology advance, and Bitcoin as the market leader, is increasing our understanding of its potential to drive innovation in global commerce.
- Digital currencies should introduce healthy competition into the monetary system that 1) brings lower cost and operational improvements to typical credit and banking transactions, as well as interbank and cross-border fund transfers, 2) expand the opportunities for micro-finance, 3) serves as an alternative to unstable currencies, and 4) create new classes of applications and programmable services.
- Bitcoin’s position as the market leader has drawn significant attention as both a form of currency to store value and as a global payment system that provides a cost effective way to transfer value. Its success will be more dependent on the trust and support of its global community of users rather than the efforts of central bankers.
- The Bitcoin architecture may be as transformational to global commerce as the World Wide Web’s Hypertext Transfer Protocol (HTTP) and HyperText Markup Language (HTML), which changed the process of digital content creation and distribution. This platform may evolve to support programmable services and manage other digital assets while enhancing our view of what digital currency is and how it is used.
- Digital currencies should benefit from the growth of on-line global commerce. Long-term success will require 1) executing transactions in a secure and timely fashion, 2) providing services that are easy to use and access, 3) adapting to a growing community of users, 4) addressing the challenges of cyber-crime and 5) confronting competition from incumbent players as well as payment service introductions by firms such as Alibaba, Amazon, Apple, Google, PayPal, Starbucks, Square and Tencent.
- Many rules still have to be written, but Bitcoin, digital currency and the “Internet of Money” will likely become an increasing part of how we engage in global commerce.