“More men and women have gone to space than there are developers that know how the blockchain works.”
That’s not exactly a compliment, nor is it a vote of confidence based on the number of people who’ve traveled into space.
At the Finovate Fall 2015 FinTech conference last week in NYC, when demoing its blockchain solution, the crew at Blockstack uttered those words as a reminder as to why the blockchain and bitcoin haven’t gone mainstream yet — and why those FinTech innovations might be a ways off from making their way into the everyday financial ecosystem.
Of course, that hasn’t stopped Wall Street from dabbling with the concept of the blockchain as a way to change how money moves from point A to point B, and it hasn’t stopped big organizations, like Visa and Barclays, from throwing their weight behind it either.
But outside the financially tech-savvy innovators with deep pockets to toss more funds toward research into the potential of the blockchain, there’s still a slew of startups trying to make a name for themselves in the market. And to do so, they’ve got to have a niche.
Bitcoin for beginners.
That’s how ArcBit pitches its bitcoin wallet that just hit the market three months ago.
ArcBit CEO and Founder Timothy Lee sat down with PYMNTS during Finovate to share more about how ArcBit’s simple interface provides a more secure and more streamlined way for consumers to store and use their bitcoins.
First, it starts with security.
ArcBit gives its users full control over their bitcoins; the company never has access to the funds. In the case of most bitcoin wallets, even those that are encrypted have some access to the bitcoins. And we all know how important security is for bitcoin users (take the Mt. Gox mess, for example).
“The problem with Mt. Gox is back in the early days of bitcoin. It was very difficult to secure your [bitcoin] wallet back then. The technology was very early days,” Lee explained. “Nowadays, bitcoin technology has evolved a lot. So, the backup of recovering the process of bitcoins got a lot easier.”
But making bitcoin easier to use doesn’t mean the mainstream is ready to adopt it. Lee fully understands this, and that’s why he’s using ArcBit to appeal to consumers who are already into bitcoin before he branches out to the true bitcoin beginners. Still, he’s hopeful that the moves on Wall Street can push the blockchain mission forward.
This, he noted, can’t be done without talking about the one name that some blockchain enthusiasts believe is holding the digital currency innovation back: bitcoin.
“I think blockchain has entered mainstream in the financial industry. They just don’t talk about bitcoin. But what they don’t know is that they are tied together. You can’t separate the two,” Lee said. “I think it will take a lot longer for the mainstream adoption of bitcoin. I’m seeing more five to 10 years, because the current state of bitcoin is very much like it was back with the Internet back in the 1990s. People didn’t know about it; only techies knew how to use it, and it was very sticky. But we’re moving very fast. And over five to 10 years, we can get mainstream adoption.”
Where Lee really sees a use case for bitcoin and bitcoin wallets are in areas where banking systems aren’t as prevalent but smartphones are. Or places like Argentina and Venezuela that have high inflation rates. Skipping the banks and embracing bitcoins and digital payments on smartphones could be one way to leapfrog the blockchain technology into the mainstream.
So how can a company like ArcBit and its “bitcoin for beginners” philosophy help innovate the financial ecosystem? By reminding consumers the use cases for bitcoin and how, when and where it can serve a purpose. And most of all, how it can enhance financial transaction security.
“Because ArcBit uses bitcoin, it’s borderless. You can send money to anyone, anywhere with a minimum fee. And people have control over their own money. There’s no third-party risk. People can’t see your money because you have control over it.”
Whether one is a bitcoin expert or a bitcoin novice, having control and peace of mind over where those bitcoins are is probably what matters most for getting consumers to buy into bitcoin.
Especially the heavily regulated, mainstream financial players.
Bitcoin Tracker Week 92
The Good, The Bad — The Top Bitcoin Stories Of The Week
Another Bitcoin Pirate Pleads Guilty
The bitcoin Ponzi scheme is know as being the first federal criminal securities fraud case of its kind, and this week it got a guilty plea to bring the case the justice.
Trendon T. Shavers, a Texas man, admitted to being the leader of the scheme, which once controlled 7 percent of bitcoins in the market. Known online only as pirateat40, he was charged with raising more than 764,000 bitcoins (valued at $4.6 million at the time and worth about $173 million today) in a case that was linked to securities fraud because he raised it through a company known as Bitcoin Savings & Trust.
Shavers reportedly ran the company out of his home and said he would guarantee any losses due to market fluctuation — which he, of course, did not. Instead, he promised investors rates he could not return and spent the money on personal expenses.
For now, it looks like another bitcoin pirate faces jail time.
Coinbase Goes IP Heavy With Bitcoin Patent Applications
Patenting anything can be a time-consuming process — especially for a volatile technology like bitcoin — but that hasn’t stopped Coinbase from filing nine bitcoin-related applications with the U.S. Patent and Trademark Office.
The patents filed include: Hot wallet for holding Bitcoin; User Private Key Control; Bitcoin Private Key Splitting for Cold Storage; Instant Exchange; Personal Vault; Send Bitcoin to Email Address; Bitcoin Exchange; Tip Button; and Off-Blockchain Transactions in combination with On-Blockchain transactions.
At least from the names of those patents, it looks like Coinbase has struck the gold standard into what’s next in bitcoin. We’ll have to wait and see which ones take off.
Bank’s Bitcoin Bans Cause Senator To Speak Up
Australia isn’t exactly the most bitcoin-friendly continent right now.
With the banks cracking down on bitcoin businesses, this has stirred the pot with one senator, Matthew Canavan, who said the banks might be overstepping their boundaries by trying to hold back bitcoin innovation from outsiders. Canavan is also on a committee who is currently studying bitcoin technology.
“The actions by the banks would appear to directly engage competition in the financial services industry as it stands now — and, by effectively nipping in the bud the growth of potential competitors, is likely to substantially reduce the potential for future competition to the detriment of consumers in the future,” he wrote in a letter. “The reasons for the apparently coordinated nature of the decisions by the major banks should also be investigated.”
Is Bitcoin A Threat To Cash?
With all the chatter about blockchain technology, blockchain-based digital currencies and their potential impact on the mainstream financial system, perhaps it shouldn’t be so surprising that the Bank of England’s chief economist thinks those digital currencies could replace cash.
But the Bank of England isn’t ready to back that claim — at least not yet. In a recent speech, Andrew Haldane, chief economist at the Bank of England, expressed how the U.K. government might look into issuing digital currency as a way to replace cash.
But this came with one caveat: “The views are not necessarily those of the Bank of England or the Monetary Policy Committee.” But Haldane has been quoted as showing some serious interest in the blockchain’s technology to overcome the central bank’s struggles to spur economic growth. That’s where creating and issuing a digital currency would come in to play.
"What I think is now reasonably clear is that the distributed payment technology embodied in bitcoin has real potential,” Haldane said. “On the face of it, it solves a deep problem in monetary economics: how to establish trust — the essence of money — in a distributed network. Bitcoin’s ‘blockchain’ technology appears to offer an imaginative solution to that distributed trust problem."
(Bitcoin) License And Registration, Please
Speaking of bitcoin going mainstream, this is about as mainstream as it is going to get for the time being.
The bitcoin journey has hit an important milestone, as one firm has been licensed to offer digital currency services in New York — a first for the industry. Boston-based firm Circle was granted the license — known, perhaps appropriately, as a “BitLicense” — by the New York Department of Financial Services.
Circle Internet was founded two years ago by Jeremy Allaire and has received financial backing by Goldman Sachs Group. The BitLicense itself will allow the company, and others that follow Circle Internet, to expand and attract customers to their currency services, while also mandating compliance with anti-money laundering and other security rules.
“Our goal is to make sending and receiving money instant, secure and free for people around the world, including New Yorkers,” said Sean Neville, Circle’s cofounder and president, in an interview.
Which, to him, means putting bitcoin in the back of the picture.
In May itBit grabbed a license from the department to open a bitcoin exchange, which increases movement toward mainstream adoption.
It’s Official — Bitcoin Is A Commodity (Well, Maybe)
The U.S. Commodity Futures Trading Commission (CFTC) just added a lot more weight to bitcoin by taking action to declare it as a “commodity,” much like gold and silver.
In an announcement, CFTC declared all cryptocurrencies as a commodity, which gives the agency the right to monitor and regulate business operations using virtual currencies for trading.
“While there is a lot of excitement surrounding bitcoin and other virtual currencies, innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets,” said CFTC Director of Enforcement Aitan Goelman.
Bank Of America Bets On Bitcoin
The question about how serious big banks and Wall Street are getting about bitcoin and blockchain (and if they should) is somewhat of a debate in the financial ecosystem.
But Bank of America just made a move that shows it’s getting a bit more serious about the digital currency that’s got a long rap sheet for not always being on the right side of the law. Bank of America, of course, is looking at how the technology — the blockchain aspect — could innovate the fund transfer process.
A recently filed patent from Bank of America, described as being a “system and method for wire transfers using cryptocurrency,” gives a bit more insight as to why and how cryptocurrency could be a game-changer for the industry.
For Bank of America, the interest in cryptocurrencies is really about removing the friction, delays and cost of third-party fund transfers across the globe. That’s where the mainstream banks have come into the conversation. This could mean helping facilitate cross-border payments and speeding up money transfers in general.
As the blockchain technology permits, most of the transfer action is on the back-end, but the patent suggests that Bank of America will enable the system to use any type of cryptocurrency to conduct the transfer (based on risk, price, etc.).