Bitcoin may not be the messiah of a new currency its hardcore fans
yearn for, but it may herald the deeper financial revolution the
internet has been waiting for.
While computers and smartphones have brought the web to more than a
third of the world’s population, online commerce still largely depends
on a banking system that has changed little over recent decades, some of
it relying on computer code written before the web was born.
The growing interest in bitcoin, a digital currency that requires no
centralized body to handle transactions, is beginning to change all
that.
“The rise of bitcoin has changed everyone’s idea of what a good payment
system should be,” says Manu Sporny, CEO of web payments company Digital Bazaar,
who is spearheading an effort to get the industry together to agree on
standards for handling online transactions. “Bitcoin raised the bar, so
everyone’s got to come in and match that in some way.”
A key moment, Sporny and others say, will be a meeting in Paris next week hosted by the World Wide Web Consortium, or W3C, one of the key bodies for setting internet standards.
Gathering for the first time to discuss web payment standards will be telecom operators such as Deutsche Telekom , Telefonica and AT&T, payment companies including SWIFT, PayPal and Gemalto, as well as the US Federal Reserve.
Bitcoin can claim some credit for this buzz of activity.
Much of the focus on bitcoin has been on its meteoric rise in value -
soaring from $30 a year ago to above $1,000 late in the year - which has
been only slightly dented by the collapse last month of Mt Gox, a
leading bitcoin exchange, with half a billion dollars’ worth of bitcoins
missing.
But bitcoin as a currency might be a distraction.
Underpinning the digital currency is a combination of key computing
principles - decentralised timestamping, public key cryptography and a
proof of work system - that promise to revolutionise transactions.
Says Peter Vessenes, CEO of bitcoin start-up CoinLab and chairman of the Bitcoin Foundation,
an advocacy group promoting its adoption: “Those three could be turned
into money, but they could also do a lot of other things.”
Cheaper deals
What interests some, and worries others, among those due to attend the
Paris meeting is the promise bitcoin offers in cutting the cost of
moving money around.
“If they can have it cheaper, they will make it cheaper,” said Marcus
Swanepoel of Switchless, a Singapore-based company offering to integrate
bitcoin processes into traditional banks and telecom companies.
Bitcoin poses a challenge for those used to handling consumer
transactions: PricewaterhouseCoopers estimates that credit card
companies charge around 3 percent in transaction fees. PayPal’s cut can
go as high as 4 percent. Those same transactions via bitcoin firms such
as Coinbase and BitPay, which bypass central financial institutions, are
as likely to be free.
source : http://www.irishtimes.com/business/sectors/technology/bitcoin-a-financial-revolution-the-web-s-been-waiting-for-1.1733445
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