As someone who’s been covering the IT financial services industry for nearly two decades, I’ve been very interested in the recent upsurge in mobile payment adoption, which Gartner pegged at a little over $235 billion at the end of 2013 and projected to top $720 billion a year by the end of 2017. What I find particularly intriguing is the fact that while the industry giants are duking it out to determine who will garner the lion share of this market, there’s another viable candidate that these behemoths aren’t talking much about that’s going to have the biggest disruption on this market: Bitcoin.
I wrote an article on this topic a few months ago, making the point that Bitcoin has the potential to do for mobile payment what Napster did for music in the late 90s, which was to remove the traditional barriers between buyers and sellers. While researching Bitcoin trends more recently, I came across “The Short Answer,” a two-minute video featuring Wall Street Journal Editor Jason Bellini giving a basic synopsis of Bitcoin. In the video segment, which was created April 2013, Bellini concluded with, “The only thing that gives Bitcoins their value is people believing they have value.”
While there’s no shortage of skeptics trying to downplay – or ignore Bitcoin altogether, there’s mounting evidence suggesting this digital currency is much more than a passing fad. Consider the following:
1. Bitcoin Transactions are Exploding. An article published earlier this month in Forbes reported that there are now around 65,000 Bitcoin transactions occurring every day and 13 million Bitcoins are in circulation globally with a combined value of $8 billion USD.
2. Emerging Markets, Nonprofits are Embracing Bitcoin. When good Samaritans from developed nations wish to send financial support to third-world countries, one of the biggest road blocks is money transfer fees. For example, an article on Coindesk.com revealed that a Canadian wishing to send CA$10 to the Republic of Malawi (located in southeast Africa) would incur a 50% fee using MoneyGram. In areas where Western Union and bank transfers are accepted, transfer fees are typically between 9% and 20%, according to a recent article in Forbes.
Within these markets, Bitcoin-friendly payment and wallet services providers are emerging and charging an average of only 3% in transaction fees. Many are even waiving all transaction fees for nonprofit organizations. This week, for example, Wikipedia announced that it received more than USD $140,000 in Bitcoin within the first seven days of accepting the digital currency.
3. Britain Poised to Embrace Bitcoin. Earlier this month, Britain’s top financial cabinet minister, George Osbourne, announced that the British government is engaged in “a major program of work exploring the potential of virtual currencies and digital money.” A recent article in Business Insider touted Britain’s “strategic and forward-thinking” position and added, “If Britain can properly regulate virtual currencies, other nations may find it cheaper to finance international trade with options like Bitcoin rather than the US dollar, which can, much to the chagrin of other nations, often be used as a tool to exert American political will around the world.”
With mobile payment poised to nearly triple in the next three years, it’s no wonder the competition is heating up among Amazon, Apple, Google, MasterCard, Visa, PayPal, and Square to become the preferred digital wallet provider. No matter which provider prevails, however, one fact is becoming clearer every day: the winner is going to support Bitcoin transactions.
Mostafa Razzak is Principal of JMRConnect, a multinational communications and marketing firm. He will be presenting at the Mobile Payments Conference Fall 2014 in CHICAGO: Buying BitCoin? A 360 degree examination on the viability of digital currency in retail