By Mark Norton: Editor @ BitcoinWarrior.net
Patrick Gauthier, General Manager of Emerging Retail Services at PayPal published an interesting article on Pymnts.com yesterday. It was a good read, talking about the progress of technology and the sometimes unexpected turns it takes and the future of money. What really struck me most about his article is that with very little editing at all, he could be talking about Bitcoin.
Gauthier starts the article when he takes the occasion of some computer problems he and his son are trying to troubleshoot to reflect on how far we have come with computer technology. He reflects that years ago he had abandoned Apple products for Microsoft because Apple was too inflexible for his needs. Now, though, his most indispensable computer is an Apple tablet that does nearly everything he needs seamlessly and without the need for days of tedious troubleshooting.
The connection, he says, is that twenty years ago credit card companies were promising a revolution in payment systems that would let people stop worrying about how they were paying for things, but simply let them enjoy the experience. What followed was years of over-promise and under-deliver. People were treated to complicated systems and plans that although necessary for the way the world was evolving, really left no one happy.
It’s Gauthier’s thesis that technological innovations now in the works, of course with PayPal at the center, are in the process of doing for payment systems what the iPad did for computing – making everything smooth and simple for the user while putting all the complicated stuff out of sight. Gauthier says of the future of payments: “I will be listening and looking, not for technological choices, but for new simpler, safer, ways of bring together consumers and merchants, to deliver on the promise of connected commerce.”
He’s right, of course. Commerce is moving more and more onto the internet. Payments in the US have long ago become primarily cashless, and other countries are looking to catch up. But while he says that he is looking for a new simpler, safer, ways to bring together consumers and merchants, what he really means is that the current system will be automated and secured to a point that the user doesn’t have to think about it, but can simply activate their personal CDID (Credit/Debit Identification Card) to make a payment. He’s looking for a world in which the mechanics of payments stay largely the same, with the banks, the credit card companies, and PayPal securely embedded in the system and sucking out fees.
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What Gauthier is almost certainly aware of, and what he most certainly won’t mention to the readers of the Pymnts site, is that Bitcoin has the potential to do everything that he is looking for, but without the middlemen. Some of the advantages of Bitcoin for consumers and merchants alike include:
- No need for a debit card since funds can be sent directly from person to person.
- Fees significantly lower than the legacy system – and likely to get lower as adoption increases, allowing merchants to accept Bitcoin payments without cashing out immediately using services like BitPay.
- No fraudulent chargebacks, a problem that PayPal has to employ a large fraud detection department to combat.
- No need for a checking account.
- No need for a savings account.
- No reading the rules of all the cards and accounts people have to maintain, or the small print clauses they always contain.
- No account fees, no over-draft fees, no late fees, no low-balance penalties, no …
- No need for Western Union.
No Gauthier would likely take exception to a number of things that I have written here. He would say that Bitcoin is not ready for prime time. He would say that Bitcoin is a playground of hackers and fraudsters. He would be right about these things. To an extent.
Bitcoin as an Internet currency is fully functional, right now. It is working out some difficulties it is having with regulations, with banking relationships (since, until adoption grows enough that people can comfortably trade bitcoin to bitcoin, moving between bitcoin and cash is indispensable). It is also building better services and software to make using Bitcoin safer and simpler for everyone. There are hundreds of projects, large and small, in progress right now that will transform how we interact with Bitcoin within the next 12 months.
And as for the claims that Bitcoin is a haven of the ne’er-do-well, well, so was PayPal. When PayPal was first introduced, it was used so often by hackers and fraudsters that it was fined by a number of state attorney’s general and was even banned in Louisiana. It’s unfortunate to say, but for innovations like Bitcoin and Paypal, they will go through a stage where they will be used more people who are trying to get around the system than by people working within it. Bitcoin is already growing to the point where legitimate users vastly outnumber the illegitimate ones, and that gap will only increase as time goes on.
So, in the end, I absolutely agree with Mr. Gauthier. And I think he should take another look at Bitcoin.