By Mark Norton Editor @ BitcoinWarrior.net
In contrast to the BitLicense proposal by the New York Department of Financial Services, it was kind of refreshing to see the consumer warning published by the Consumer Financial Protection Bureau reminding potential investors that Bitcoin is the Wild West. It wasn’t that there was anything particularly new or interesting in warning, it was mostly a rehash of things that have been said many times before, but that it was being issued by a bureau with a mandate to actually protect the consumers, and in its short history seems to have been attempting to do just that. If the CFPB becomes the primary agency regulating Bitcoin in the US, the focus of the rules are more likely to be in how businesses treat their customers and not about protecting vested interests or enforcing overly expansive AML/KYC geared more toward keeping tabs on citizens than protecting them.
That being said, with each new rollout of a warning like this, it’s well to keep in mind that ‘real’ currencies are no strangers to scandals, thefts, swindles, or any of a variety of other ills. In the papers just this week is the story of a counterfeiting ring that was producing ‘super bills’ in Cherry Hill, New Jersey. Yes, they were busted, but they also operated for years, printing a reported 44 million dollars before finally being caught. How many bitcoins have been counterfeited? None.
Let’s not forget the high-frequency trading scandal revealed by Michael Lewis, the LIBOR scandal, the HSBC money laundering scandal, Bernie Madoff, and, really, the whole Great Recession caused by banks over-investing in poor quality repackaged household loans on the notion that they could off-load them before the whole house of cards came crashing in. While Bitcoin has a long list of hacks, thefts and swindles of its own, it is certainly no worse than government backed currencies. And once you cancel out the ‘Wild West’ theme, the benefits of Bitcoin over government money begin to stand out in much sharper relief: It allows individuals to save, send, and spend their money without the need of a bank; it allows their savings to tend to increase over time, making saving a virtue again; and it forces governments to budget more wisely since they will not be able to print themselves out of debt.
Bitcoin adoption is slow: its general reputation is poor and its learning curve can be scary for the newcomer. But two stories caught our eye this week to suggest that building the infrastructure for Bitcoin will not all need to be done by bitcoiners:
It turns out that TGI Fridays has started testing out a pay by QR code app in one of their stores in Britain. Given how long it takes for people to pay their bills at the end of a meal, this will be a real boon to diners and give them a great deal more flexibility in things like splitting the bill. The app Fridays will be using is called Zapper and essentially lets a customer send a payment from their credit card on file with Zapper to the restaurant.
If apps like Zapper are successful, the look and feel of how you pay using a credit card will become very simple to the way you pay with Bitcoin. Once people realize this, and add in news of future increases to the value of Bitcoin, and people will wonder why they’re paying bank fees to pay instead of using Bitcoin.
The next story is the news that Amazon is rolling out a new mobile payment system called Amazon Local Register to challenge Square and PayPal Here. Their idea is to offer lower fees to merchants than their competitors as well as offer very low-priced card swiping machines. Amazon carries enough weight to get merchants comparison shopping for better rates, which might just lead them to Bitcoin, particularly if there is also an expansion of the use of QR codes for payment like in the story above.
There are a lot of challenges that will need to be faced before Bitcoin becomes mainstream, but not all of the heavy lifting is going to be done by bitcoiners themselves. We expect that banks and governments, just by doing what they do, will help pave the way.