The payments industry has cast a weary eye on Bitcoin and other virtual currencies, but a column in SpendMatters.com asks whether B2B payment folk shouldn’t seriously consider evaluating Bitcoin.
"We should be paying closer attention to firms such as Bitcoin, not just based on their share of B2B activity today but rather what their underlying models and infrastructure could signal about the future," the column said. "Bitcoin takes the payment infrastructure of banks and turns it on its head. Why? Because the cost of sending money is almost zero (there is cost of mining, and that gets increasingly expensive, but is still very, very small relative to the cost of sending money). Today, the cost of sending money through banks, especially in a cross-border situation, can be expensive – especially when multiple currencies come into play. We can thank the current correspondent bank infrastructure and SWIFT monopoly for this (which the banks all support because they pass along costs to customers)."
Bitcoin effectively lowers the cost of money transfer to zero, the column argues and "it does so without having to go through bank infrastructure – what it lacks though is remittance information – it’s just anonymous bits and bytes saying move money from this computer to that computer. The ultimate owner of any single unit of Bitcoin can be tracked through a central system, and any transaction is automatically recorded."
Of course, B2B payments folk need to wrestle with the same virtual currency questions as does everyone else. Namely, will this work and will it last?
Even though about 63,000 businesses take Bitcoin, the longterm viability is still "a big if," the column said.
Part of the problem is Bitcoins are often liquidated and that can cause Bitcoin's price to plummet, which is "not good for something that is trying to be an established currency for merchants."
"For Bitcoin and Bitcoin plumbing to work in the supply chain, it will have to be a stored value that can sit on a balance sheet, unless its value or the value of a derivative value is pegged to a stable, established currency in B2B trade. Yet don’t count out Bitcoin from B2B payments just yet. There is still much to understand. Bitcoin made the main stage at Sibos, a conference for traditional banks, and it is clear that bankers are starting to come to the party. And corporate procurement, A/P and treasury groups should be crashing the festivities as well, at the very least to understand Bitcoin and its potential."