EDITORIAL- Is Bitcoin Stable Enough to be a Currency

Would You Like to be Paid in US Dollars, Gold or Bitcoins?

Three stories that I read yesterday, gave me pause to think about cryptocurrency and in particular, to ask if Bitcoin is a currency:

• Putin Thinks the Cryptoruble will Avoid Western Sanctions
• South Korea Ends Anonymous Crypto Trading
• Japanese GDP Grows From Bitcoin Effect

We need to accept a definition of 'currency'.  

Merriam Webster defines currency as: Something (such as coins, treasury notes, and banknotes) that is in circulation as a medium of exchange; Paper money in circulation; or, A common article for bartering (Furs were once used as currency). 

Other references suggest a system of money in general use; For example the US dollar is a strong currency that may be used to settle accounts in other countries. Synonyms for currency include: Money, legal tender, cash, banknotes, bills, notes, coins and coinage.

According to Wikipedia currencies can be classified into two monetary systems: fiat money and commodity money, depending on what guarantees the value (the economy at large vs. the government's physical metal reserves). Some currencies are legal tender in certain political jurisdictions, which means they cannot be refused as payment for debt. Others are simply traded for their economic value. 

For the most part, the concept, understanding and regulation of digital cryptocurrency is still developing. However, the idea of 'common acceptance' with slow intentional movements of value or 'limited volatility' is important for a monetary system to gain and hold the trust of those who intend to use it as a medium of exchange.

On Tuesday the Wall Street Journal reported that Founders Fund, run by Peter Thiel, a PayPal co-founder and early Facebook investor, has bought millions of dollars in Bitcoin. According to some reports, the venture capital firm bought about $15 million to $20 million of Bitcoin. This news drove Bitcoin to a new high, at one point surpassing US$15,040 – a 14% daily gain. Based on the idea of 'limited volatility' this movement suggested Bitcoin is not a currency. 

However, we observed that as Bitcoin's price climbed, trading in the Chicago Board Options Exchange (CBOE) Bitcoin futures was briefly halted in accordance with pre-set rules. The Chicago Mercantile Exchange (CME) and CBOE have both launched futures contracts tied to Bitcoin's price. These new futures markets allow institutional investors to hold something that looks like Bitcoin, without having to hold the actual cryptocurrency. Some of these investors have very deep pockets and previously faced regulatory roadblocks to accessing the Bitcoin asset class. Trading in futures contracts that are settled in cash and trusting the 'halt trade' mechanism to work will add confidence to Bitcoin investors and may in the long term solve the volatility issue.

However, there are still pot holes to be avoided with Bitcoin. Jason D. Rowley, is a venture capital and technology reporter based in Chicago. On December 12th he published an article on Crunchbase suggesting Bitcoin had lost its way as a means of exchanging value. He reviewed transaction cost and other elements that were once attractive to those who used Bitcoin.

So back to the question, Is Bitcoin stable enough to be a currency? 
For most mainstream transactions the answer is likely 'no' because of the volatility and risk of value changes involved. However, Proof of Concept (POC) work to understand the cryptocurrency system and how it will have a bearing on your business in the areas of exchange, taxation, smart contracts and settlement seems advisable.

The InfoStream article on Bitcoin last year, hardly anticipated the year this cryptocurrency experienced. However, the three stories at the beginning of this article are an indication of the type of disruption that is coming toward our global monetary system.

As to the other question: Paradigm accepts settlement in US dollars, doesn't accept Gold and is experimenting (fooling around might be a better term) with cryptocurrency. Here are two other links to the Bitcoin story for your convenience:

• bitcoin.org
• bitcoin.com

About Executive Producer, Larry R. Evans:
Larry Evans is an experienced innovator and strategist. He is Principal of The Paradigm Corporation, which is headquartered at Thunder Ridge just outside Crossfield, Alberta, Canada. He is known for bringing a unique and predictive lens to paradigm shifts during a career that spans 45 years. Now often from his wheel chair, he brings a grounded, tenacious view of brand, ecosystems and trusted relationships for the digital age. His perspective and values influence his life, business and ministry.

https://www.linkedin.com/in/larryrevans

FUTURE TRENDS - Cardless ATMs and the Continuing Development of Fintech

(City National Bank)

Less than a generation ago, cheques were ubiquitous.

In 2000, cheques were used in more than 40 billion US transactions, and by 2012 that number had plummeted by more than 50%.

In contrast, the use of debit cards skyrocketed.

But with the rapid development and adoption of fintech – technology that enables digital financial transactions – debit cards may face their own rapid end.

Multiple coexisting pressures drive the potential shift.

On the one hand, there is pressure to find an alternative to debit cards, and to introduce technology that is seen as more secure and reliable.

Banks have been dealing with a significant decline in trust for years now, while fintech companies have been gaining trust.

And debit card fraud is a concern for many users.

Although chip cards have reduced the frequency of debit card fraud, they have not eliminated the risk, and consumer trust remains low.

On the other hand, rather than pushing away from consumer distrust and faulty technology, is the positive draw of new technology and the many opportunities opening up within the realm of wearables and bearables – the portable, personal, personalizable, Internet of Things that users either carry with them, or wear as watches, necklaces, or other accessories.

Even Siam Commercial Bank Pcl, which is a 1000-year-old institution in Thailand, is excited about the potential in this digital future.

They’re working on a comprehensive app that would go beyond day-to-day banking and allow users to do everything from finding and paying for entertainment, to becoming a major portal for businesses attracting and engaging customers.

Those types of major banking redesigns are coming to banks globally, but for now, in North America, users can anticipate a smaller but no less momentous shift as banking cards go the way of checks.

And what will replace them?

Cellphones.

JPMorgan Chase, Bank of America, and Wells Fargo all either have plans to introduce cardless ATM transactions within the next year, or have actually rolled out the technology in test cities.

Canadian bank BMO introduced cardless ATM machines in some US locations last year, and Spain has had them since 2011.

PayPal also offers some ‘cardless cash’ services, and both Apple Pay and Android Pay have introduced tap technology in both phones and watches.

Mastercard and Coin have also teamed up to offer wearable options.

Most of these ‘wearable and bearable’ IoT technologies rely on near-field chip technology, a growing tech sector that is set to take off in 2017.

There are security risks that come with the new technology, particularly because the IoT itself introduces risks.

Connected devices are often only as secure as the least secure device in the network, and that can leave mobile users open to threats.

Despite these risks, the potential is exciting.

Cardless ATM transactions take a fraction of the time that traditional transactions do, and the prospect of robust and comprehensive financial apps that streamline and secure the payment process across multiple types of purchase is definitely appealing.

About Tiffany Sostar

Tiffany is a published academic, an editor with the Editors Association of Canada, an independent scholar and researcher, and a self-care and narrative coach. She is particularly interested in the intersection of technology and identity - how our tools shape our selves and change our stories, and in how the nature of work is changing as we incorporate more technology into our daily lives.