For a few months, I’ve been fighting off the urge to write a Trend Tuesday post about Bitcoin, a form of digital currency often referred to as cryptocurrency (bitcoins rely on sophisticated cryptography to secure both their creation and transfer).
On one hand, media coverage surrounding Bitcoin seems to be everywhere. On the other hand, a lot of open questions and doubts about Bitcoin remain – doubts which escalated in recent weeks with high profile news regarding charges that criminal elements were using bitcoins to launder money and perhaps, even more importantly, the hacking of a well-known Bitcoin exchange in which hundreds of millions of dollars worth of bitcoins were stolen by cyber criminals.
What I finally decided to do, though, is focus on what may be the more important trend represented by Bitcoin – a desire by forward thinking technology investors to a) connect buyers and sellers — digitally — in a more secure/trusted way, b) drive down the cost of payment transactions between them, c) eliminate the need for physical currency (not to mention the theft that inevitably accompanies it), and d) eliminate the risks associated with credit card fraud and the huge cost of mitigating those risks.
Mark Andreesen, noted technology investor and co-founder of the venture capital firm, Andreesen Horowitz, recently wrote a brilliant piece in the New York Times detailing the case for Bitcoin and more technologically advanced payment alternatives in general. It’s a great read and a wonderful primer for anyone wanting to understand why some very smart people with successful track records are solidly behind Bitcoin.
Several small companies in various segments of the travel industry around the world have begun accepting Bitcoin for payment. More recently, some larger ones had begun announcing that they would accept the currency as well. It remains to be seen how all the recent news will impact that acceptance in both the near and long term… the same can probably be said of merchants across all industries who had begun accepting Bitcoin.
Despite all the recent negative press, Bitcoin remains both an intriguing technology and a promising new approach to implementing digital payment efficiencies and security safeguards. Regardless of how this all plays out – whether Bitcoin ultimately ‘wins’ or not — it’s probably safe to say that investors, given the huge opportunities that exist, will continue look for more modern ways to safely put buyers and sellers together.