Why Your Business Might One Day Accept Bitcoin (or Something Like It)
By Walter Frick, Harvard Business Review
Every day seems to bring a new headline about Bitcoin, the digital currency first created in 2008 by the pseudonymous programmer Satoshi Nakamoto. Yesterday’s news that Mt. Gox, the largest Bitcoin exchange in the world, will file for bankruptcy owing to the theft of nearly six percent of the world supply of bitcoins is a reminder that the digital currency is far from ready for primetime.
The price of bitcoin remains highly volatile, its merits as a currency are contentious among economists, and its popularity thus far is inextricably tied to illicit activity. Yet, interest in the “cryptocurrency” is rising, and while its user base may be small, a growing number of merchants are choosing to accept bitcoin as payment.
As The Washington Post’s Tim Lee has written, Bitcoin’s true potential may be as a digital payment protocol rather than as a true currency. In other words, Bitcoin’s problems as a store of value may not prohibit it from working as a medium of exchange, one that could ultimately prove attractive to businesses. To explore this potential, I talked to Jeremy Allaire, serial entrepreneur and founder of the video platform Brightcove as well as the web development language Cold Fusion. He is currently working on a company called Circle, which is building products to support the use of Bitcoin and other digital currencies.
Let’s start with Mt. Gox. Is this a significant setback for Bitcoin?
I like to say we’re in the “pre-Netscape” phase in the evolution of this technology and industry. The first wave of startups, who were frankly ill-prepared to take on the responsibilities that go with managing consumer financial products, are being weeded out. In their place, we are seeing a new generation of seasoned entrepreneurs, industry leaders and world-class venture capital backers build financial services that offer the benefits of digital currency along with the safeguards, scale and protections that are really required to earn and sustain the public trust. At the same time, there is a new breed of Bitcoin exchanges emerging that have serious institutional involvement with Wall Street participation, are based in New York, London and other financial centers, which will bring the financial instruments, liquidity and other components that will help stabilize the market and smooth out historic volatility. While what happened with MtGox and their customers is truly awful, Bitcoin and the digital currency industry as a whole will be in a much stronger position with companies like that out of the picture.
Keep reading Why Your Business Might One Day Accept Bitcoin (or Something Like It) – Walter Frick – Harvard Business Review.
