Virtual Currency - Payments · PDF file · 2014-09-18Bitcoin ATMs Open in Singapore...
94
Virtual Currency Address: Level 12, 95 Pitt Street, Sydney, NSW 2000 Australia email: [email protected] 2014 Best of 2013-14 Curating the top payments news online
Transcript of Virtual Currency - Payments · PDF file · 2014-09-18Bitcoin ATMs Open in Singapore...
Virtual Currency
Address: Level 12, 95 Pitt Street, Sydney, NSW 2000 Australia email: [email protected]
2014
Best of 2013-14
Curating the top payments news online
1
Contents
Introduction .......................................................................................... 3
Chapter 1: Statistics .............................................................................. 5
Swedish Central Bank Report: Virtual Currency Retail Market Impact ................................ 6
HP-RFi's Australian Payments Research Sixth Edition ................................................................ 8
HP-RFi’s Australian Payments Research Fifth Edition ................................................................ 10
Bitcoin Breaks $1,000 for First Time ............................................................................................... 12
World Payments Report 2013 ............................................................................................................. 13
Chapter 2: Regulation .......................................................................... 16
Russia Tightens Anonymous Payment Rules ................................................................................ 17
RBA's Bitcoin Briefing Paper ................................................................................................................ 18
IRS Classifies Bitcoin as Property for Tax Purposes ................................................................... 19
Japan Confronts Bitcoin Regulation in Wake of Mt Gox ............................................................ 20
MtGox Bankruptcy Rumours ................................................................................................................ 21
Indonesia Bank Warns Bitcoiners ...................................................................................................... 22
Alibaba Ban Bitcoins ............................................................................................................................... 23
India Shuts Down Bitcoin Exchanges............................................................................................... 24
Singapore Open to Bitcoin Payments .............................................................................................. 25
China Bans Bitcoin .................................................................................................................................. 26
Bitcoin Rebounds After Plunge on Silk Road Charges ............................................................... 27
Global Regulatory Round Up ............................................................................................................... 28
Bitcoin Buzz Grows Among Venture Investors Despite Risks ................................................ 29
CBA Closes Accounts on Bitcoin Processor CoinJar .................................................................... 30
Congress Starts Looking into Bitcoin ............................................................................................... 31
Court Rules Bitcoin is Real Money ..................................................................................................... 32
Emerging Digital Payments Launch Self-Regulatory Group .................................................... 33
Winklevoss Twins Plan $20 Million IPO for 'Bitcoin Trust' ....................................................... 34
Chapter 3: Bitcoin ATMs ....................................................................... 36
NZ Bitcoin Central Closes Bitcoin ATM in Auckland .................................................................... 37
Swiss Ban Bitcoin ATM in Zurich ........................................................................................................ 38
ABA Unveils First Bitcoin ATM in Sydney ........................................................................................ 39
Bitcoin ATMs Unveiled in NZ ................................................................................................................ 40
Bitcoin ATMs Open in Singapore and Hong Kong ........................................................................ 41
Lamassu Bitcoin ATM Arriving in Singapore .................................................................................. 42
Australian Bitcoin ATMs Initial 100 Placements ........................................................................... 43
Canada's Robocoin ATM Redeems Bitcoins ................................................................................... 44
Bitcoin ATM Kicks Off 15 Unit Production Run ............................................................................. 45
2
Chapter 4: Merchant Adoption ............................................................. 47
Bitmart NZ Debuts Virtual Currency Based Retailing ................................................................ 48
Australian Property Agent Forsyth Accepts Bitcoin .................................................................... 49
Chicago Sun-Times and BitWall Trial Bitcoin Paywall ................................................................ 50
Bitcoin Breaks $1000 on Zynga Announcement .......................................................................... 51
Sydney Pub Accepts Bitcoin for Beer .............................................................................................. 52
Chapter 5: Consumer Products ............................................................ 54
Eaze Enables Bitcoin 'Nod to Pay' on Google Glass.................................................................... 55
Xapo Offers Bitcoin Debit Card ........................................................................................................... 56
Cryptex Launch Bitcoin Debit Card ................................................................................................... 57
SmartMetric Biometric Bitcoin Card ................................................................................................. 58
Bitcoin Exchange Mt.Gox Introduces One-Time Password Card ........................................... 59
Nio Card Supports Bitcoin Payments ............................................................................................... 60
Chapter 6: Online Facilities .................................................................. 62
CoinJar Adopts BPAY for Bank Transfers ........................................................................................ 63
Facebook E-Money Seeks Approval in Ireland ............................................................................. 64
Square Market Accepts Bitcoin Payments ...................................................................................... 65
Bitcoin Core Fix for Transaction Malleability Flaw ....................................................................... 66
Ebay's New Virtual Currency Category in UK and US ................................................................ 67
Alliance Virtual Offices Enables Bitcoin Payments ...................................................................... 68
Amazon Launches Coins Virtual Currency in UK ......................................................................... 69
Infobip Launches 'Yen Coins' .............................................................................................................. 70
Facebook Drops Virtual Currency ...................................................................................................... 71
Chapter 7: Opinions & Debate .............................................................. 73
10 Digital Payments Predictions for 2014 ...................................................................................... 74
Seven Limitations of Bitcoins .............................................................................................................. 76
10 Product Innovations to Watch in 2014 ..................................................................................... 77
Bitcoin Forecast to Crash in 2014 ..................................................................................................... 78
Paypal's President David Marcus Bullish on Bitcoin ................................................................... 79
Bitcoins Astronomical Appreciation in Value ................................................................................. 80
CeBIT Conference 2013: Start-ups and Innovation in Payments ......................................... 81
Money2020 Conference ......................................................................................................................... 82
New Vision of Banking's Future .......................................................................................................... 83
Conclusions.......................................................................................... 84
Our Services ........................................................................................ 86
FREE Subscription to Payments Innovation Daily ....................................................................... 87
Running Campaigns with Payments Innovation Daily ............................................................... 88
Web Research Services ......................................................................................................................... 90
Sponsor Industry Trackers ................................................................................................................... 91
Branded Newsletter Services .............................................................................................................. 92
3
Introduction
The Best of Virtual Currency 2013-14 looks at the stunning rise and fall of Bitcoin and other virtual
currencies. This is the first in a series of topic compilation reports highlighting news stories and
online content covered in the FREE Payments Innovation Daily newsletters.
This report contains more than 80 pages of feature coverage from the past year including briefing
papers from regulatory bodies grappling with the emergent technology, economic impact studies,
stories of fortune and bankruptcies, new ventures, and the creation of new products including
specialised cards and ATM machines.
Feature content is broadly categorised according to our editorial judgement and articles are
arranged in chronological order of publication. All articles include links to source content online.
Any representations are entirely attributable to source material and do not reflect the views of
Payments Innovation Daily. Please advise us if you discover inactive links. If you have any
concerns please contact our editorial team.
Future Publications
Payments Innovation Daily will be releasing a number of topic compilation reports with all the best
content covered during the 2013-14 financial year. These reports are expected to achieve wide
circulation beyond our current subscriber base. There are 20 different topics as listed.
Card Networks
Online Payments
ATMs
Payments Infrastructure
Faster Payments
Regulation
Virtual Currency
Cross Border Transactions
Innovation
Financial Inclusion
Fraud and Security
Merchant Acquiring
Mobile POS (Availablle Now)
Mobile Payments (Availablle Now)
Mobile Commerce
Mobile Banking
P2P and Remittances
Loyalty and Rewards
Data Analytics
B2B Transactions
If you are interested in placing advertisements or contributing feature content in our next topic
compilation reports contact our editorial team.
5
Chapter 1:
Statistics
6
23rd June 2014 Share Article
Swedish Central Bank Report:
Virtual Currency Retail Market Impact
Sveriges Riksbank, Sweden’s central
bank, has published a brief economic
commentary document titled “Have virtual
currencies affected the retail payments
market?” The document reveals that
Bitcoin and other similar digital currencies
have not made any impact on the Swedish
payment system. However, they can
contribute to meeting new payment needs
and to making payments cheaper and
more secure.
In the report the Swedish central bank lists
the disadvantages of virtual currencies,
including lack of regulation and consumer
protections, volatility, security risks and
the possibility of being utilised for illicit
activities.
7
On the other hand the report highlights that it is still essentially a positive innovation and
experience in the marketplace.
According to the report choice of payment service comes down to added value in relation to other
payment services. This also applies to virtual currencies, which can for instance make some
cross-border payments simpler, faster and cheaper. Another advantage is if the payer does not
need to share sensitive information, such as card number or bank account number, with the
payee. Virtual currencies may also be better suited for small payments, so-called micro payments,
on some websites.
The author of the document, Björn Segendorf who works in the Financial stability Department of
the Riksbank, says that the use of Bitcoin and other similar digital currencies in Sweden remains
very limited. There are only around 25 Swedish companies are accepting it.
The report concluded that the impact of an innovation will depend on how much it is used. The
limited use of virtual currencies in Sweden means that the positive and the negative effects are
very minor. If the situation were to change, and virtual currencies were to be used to a much
greater extent, the situation could well change.
Sources: Read more at CoinDesk, CoinBuzz, Forex Minute or download the document.
Payments Innovation Daily covered Indonesia Bank Warns Bitcoiners, India Shuts Down Bitcoin
Exchanges, Singapore Open to Bitcoin Payments, China Bans Bitcoin, IRS Classifies Bitcoin as
Property for Tax Purposes, and Japan Confronts Bitcoin Regulation in Wake of Mt Gox.
8
19th May 2014 Share Article
HP-RFi's Australian Payments Research Sixth Edition
According to sixth edition of HP-RFi's
"Australian Payments Research" paper, cash
still accounts for over a third of consumer
transactions though card based payment
methods from the international schemes is only
2% less. The research explores the current
state of consumer payments in Australia by
identifying payment method trends in
consumer spending behaviour.
The paper provides measurable insight, from a
broad sample of respondents, into the
incremental changes continuing to impact
payment behaviour in Australia. Wearable
technology and virtual currency, Bitcoin are
also presented in this edition of the report for
the first time.
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Key findings of the report:
Despite a sudden drop in the use of cash after banks began pushing contactless
payments in earnest two years ago, people are still more likely to reach first for notes and
coins for the foreseeable future.
The online space has potentially reached saturation, with nearly all Australians (85%)
having made an online purchase in the last 12 months. PayPal usage dominates online
payments preferred by half of online purchasers.
15 percent of consumers were aware virtual cards existed and 5 percent of Australians
have used a virtual card. 33 percent of virtual card users said they would prefer a virtual
card over a plastic card in a card-not-present transaction.
47 percent of Australian adults have used prepaid cards at least once in the last 12
months, although only 7 percent use them in a typical month.
Alan Shields, RFi's managing director of Advisory, said cash use is being eroded by a plethora of
different payment methods as well as more people buying online. However the decline of cash
had "plateaued" because small business are reluctant to introduce contactless terminals.
Sources: For further reading try RFi or download the report.
Payments Innovation Daily suggested reading
HP-RFi Australian Payments Research Edition 5
Deloitte Australian Technology Adoption Report
Australian Credit Card Industry Survey 2013
Paypers Australian Cross-Border Ecommerce Report
10
29th November 2013 Share Article
HP-RFi’s Australian Payments Research Fifth Edition
The HP-RFi have released edition 5 of their
“Australian Payments Research” paper,
which examines the payment behaviour of
Australian consumers to identify and validate
key trends. The paper also evaluates the
effect on the future of the payments
system and analyses the growth of pre-paid
cards and store gift cards.
This report discusses how payment methods
have changed since September 2012, with
many Australians tending to spend more with
prepaid cards, gift cards and the emerging
use of Bitcoin, instead of using cash or
cheque. Cheque usage has decreased 9.2
percent in the 12 months to July 2013.
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The proportion of consumers owning contactless cards increased from 38 percent to 57 percent
from September 2012 to September 2013. Consumers using contactless cards also doubled from
21 percent to 40 percent.
The payment landscape in Australia is changing. Many consumers are switching to payment
methods such as mobile wallet, contactless payments or Bitcoin. Payment methods offering
consumers additional security features and faster ways to pay will likely gain more attention.
Sources: For further reading try RF Intelligence, you can also download the report here.
12
28th November 2013 Share Article
Bitcoin Breaks $1,000 for First Time
The virtual currency bitcoin on Wednesday broke above $1,000 per unit for the first time,
quintupling in a month, and marking a rise of over 7,600 percent so far this year. Bitcoin reached
$1,073 at 1640 GMT on Wednesday while it traded at just $205 on October 28.
Bitcoin has gained its momentum in recent weeks after US regulators, including Federal Reserve
Chairman Ben Bernanke, took a more positive view of the currency while many analysts and
investors have considered bitcoin's rise as a bubble.
KapronAsiam MD Zennon Kapron said: "What we're seeing is governments publicly announce
and show that they recognize Bitcoin as a factor in the financial system and that they are
considering how to regulate it - which is good for the currency. If either government were going to
ban the currency outright, they would have made the decision now rather than later as it would
really serve no purpose to delay beyond fueling speculation. So overly heavy-handed government
regulation looks unlikely."
Sources: Read more at CNBC or Bangkok Post, or watch the CNBC video report here.
13
16th September 2013 Share Article
World Payments Report 2013
Capgemini and RBS have published World
Payments Report 2013, their ninth annual
report on non-cash payments. The Report
provides detailed statistical data as well as
updates on regulatory and industry initiatives
including SEPA and innovation within
payments acquisition.
The report explores B2B business models
and alternative C2B models, which are
driving strong growth in e-payments, m-
payments, and prepaid cards and creating
convergence in retailing. The report
highlights that non-banks are taking an
increasing share of the global payments
market via instruments such as e- and m-
payments prepaid cards, and virtual currency.
Overall, global non-cash payments is forecast at 333 billion for 2012 with strong growth signals
from a two-speed recovery in the global payments industry.
14
Some key statistics include;
Europe and North America remain the largest non-cash payments markets with two-thirds
of transaction volumes, and growing at mid single digit rates.
The Central Europe, Middle East, Africa (CEMEA) and Emerging Asia regions each grew
by more than 20%
Latin America recorded above average growth of 14.4%
Debit card volumes rising15.8% to 124 billion transactions
Credit cards climbing 12.3% to 57 billion transactions
Estimates for m-payments and e-payments to grow at 58.5% and 18.1% annually in 2014.
Sources: For more detail on the report click through to Capgemini, or you can obtain a copy of
the report here. There is also a larger infographic.
16
Chapter 2:
Regulation
17
26th May 2014 Share Article
Russia Tightens Anonymous Payment Rules
Russian regulators have adopted a set of amendments to the national legislation on payments,
including an “anti-terrorism” package, which makes user identification mandatory for electronic
payments in certain situations where anonymous payments were previously allowed.
Three levels of transactional anonymity are now established:
The anonymous use of electronic payments remains possible for individual transactions
under 15,000 rubles (nearly USD 440), with a monthly limit of 40,000 rubles (USD 1,170)
except money transfers between individuals or payments to foreign e-merchants
operating without a Russian representative.
Higher limits up to RUB 60,000 (USD 1,750), with a monthly limit of RUB 200,000 (USD
5,830) for users providing their mobile phone number, their passport number, and a
secondary identification number – either their tax payer number, individual insurance
number or medical insurance number.
Fully identified users – those who present their original or notary certified passport – can
make e-payment transactions of up to 100,000 rubles (USD 2,915).
The amendments came into force 10 days after their adoption, which did not leave enough time
for payment operators to adapt their systems.
Oleg Poskotin, VP of Finance at Xsolla, an international payments service provider said: “It will
take at least 3-4 months to enforce and implement a compliant identification process for those
companies who already have it in place, and up to a year to for those companies who currently do
not have it.”
Sources: Read more at East-West Digital News or The Paypers.
Payments Innovation Daily covered Russia Orders $3.8b Security Deposits from
Schemes, Card Schemes Resume Processing in Russia, and Russian Central Bank
Negotiates with Card Schemes.
18
2nd May 2014 Share Article
RBA's Bitcoin Briefing Paper
The Reserve Bank of Australia (RBA) has released a briefing document on bitcoin which calls
bitcoin a “limited” risk to the country’s payment systems. The paper was prepared for RBA's
Payments System Board one year ago but has now been made public by an Australian reporter
on Reddit, following Freedom of Information arguments.
The RBA briefing paper notes a number of risks including:
A reduced ability to implement monetary policy
A fall in revenue from the minting of money
A potential to destabilise the financial system if there was a rush to sell bitcoin due to loss
of confidence in the system or third-party service providers.
The briefing paper says that the digital currency faces an uphill battle in dislodging the current
payments infrastructure. The document argues that a significant amount of computing power is
wasted in a "winner-takes-all" race to mine blocks. However, it also sees bitcoin remaining the
pre-eminent digital currency due to its first-mover advantage.
Sources: Read more at CoinDesk, Digital Currency Magnates or download the paper.
Payments Innovation Daily covered RBA's Same Day Direct Entry Payments, RBA's
Conclusion on Payment Card Access Regimes, Australian Property Agent Forsyth Accepts
Bitcoin, and Australian Bitcoin ATMs Initial 100 Placements.
19
27th March 2014 Share Article
IRS Classifies Bitcoin as Property for Tax Purposes
The IRS (Internal Revenue Service) in the United States has classified Bitcoin as property and not
currency for tax purposes, imposing significant capital gains paperwork and tax liabilities on users.
David Evans, chairman of Global Economics Group, commented: “every time you pay with an
appreciated bitcoin, you face a tax liability. And it means you have to pay your personal income tax
rate of about 10 percent to 40 percent (more if state taxes apply) if you’ve held the appreciated
bitcoin for a year or less.”
Some key highlights from IRS guidance:
Transactions using virtual currency must be reported in U.S. dollars.
Fair market value must be determined as of the date of payment or receipt.
When “mining” virtual currency, the fair market value is included in gross income.
Payments are subject to information reporting like any other property payment.
Gain or loss from the sale or exchange of virtual currency depends on whether the virtual
currency is a capital asset in the hands of the taxpayer.
Sources: Read more at IRS, PYMNTS.com, Business Insider or download IRS’s Q&A Notice.
Payments Innovation Daily suggested reading:
MtGox Bitcoin Exchange Bankruptcy Rumours
Australian Bitcoin ATMs Initial 100 Placements
Indonesia Bank Warns Bitcoiners
Alibaba's Bitcoin Ban
China Ban Bitcoin
India Shutting Down Bitcoin Exchanges
Singapore Open to Bitcoin.
20
7th March 2014 Share Article
Japan Confronts Bitcoin Regulation in Wake of Mt Gox
Japan will decide on Friday this week how to treat bitcoin under existing laws after the collapse
last week of Tokyo-based Mt. Gox, one of the world's largest bitcoin exchanges. Banks and
securities firms will not be able to handle bitcoin as part of their main business.
Takuya Hirai, head of an IT panel in the ruling Liberal Democratic Party, said: "We haven't yet
thoroughly grasped the situation, but some kind of regulation is needed from the perspective of
consumer protection, and we will also discuss (bitcoin) from the perspective of imposing asset
tax.” However, it remains unclear how they could do this since bitcoin transactions are largely
anonymous.
The Financial Services Agency Japan (FSA) and the Finance Ministry have said bitcoin is not a
currency and doesn't fall under their purview, while the Bank of Japan has said it was studying the
bitcoin phenomenon with interest. Chief Cabinet Secretary Yoshihide Suga said the relevant
Japanese ministries will be in close contact with each other on matters relating to bitcoin.
Sources: For further reading try Reuters.
Payments Innovation Daily covered MtGox Bitcoin Exchange Bankruptcy
Rumours, Indonesia Bank Warns Bitcoiners, Alibaba's Bitcoin Ban, China's Bitcoin
Ban, India Shutting Down Bitcoin Exchanges, and Singapore Open to Bitcoin.
21
27th February 2014 Share Article
MtGox Bankruptcy Rumours
The price of bitcoin slumped 20 percent on Tuesday morning this week as one of its leading major
exchanges, Mt.Gox, went offline and trading on it had been halted. Around midday on Tuesday,
shortly before the shutdown, a bitcoin was worth $135, compared with the $430 quoted by the
CoinDesk bitcoin price index. According to Re/code “Mt. Gox has confirmed it will file bankruptcy
in private discussions with other members of the bitcoin community”.
This latest development comes after the exchange deleted all of their tweets from its Twitter
account on Monday and their CEO Mark Karpeles resigned on Sunday from the board of the
Bitcoin Foundation. There is an unverified document circulating online which claims that Mt.Gox
has lost 744,408 bitcoins (worth around USD 350 million) due to theft related to the trading fault.
According to CNBC, a malware called "Pony" was used to steal digital wallets containing bitcoin.
Mt. Gox halted withdrawals earlier this month following a statement that they detected unusual
activity on their bitcoin wallets which was under investigation.
Sources: Read more at Reuters, Re/code, Arab News or watch CNBC’s report video.
Payments Innovation Daily covered Bitcoin Forecast to Crash in 2014, Indonesia Bank Warns
Bitcoiners, India Shuts Down Bitcoin Exchanges, China Bans Bitcoin, and Paypal's President
David Marcus Bullish on Bitcoin.
22
20th January 2014 Share Article
Indonesia Bank Warns Bitcoiners
Bank Indonesia (BI) has raised concerns about the use of Bitcoin in Indonesia. While the central
bank does not have plans to intervene in the use of the virtual currency, deputy governor Ronald
Waas said that it violates some of the country’s laws and echoed much of the concerns other
central banks have already vocalised.
Waas listed three regulatory areas that bitcoiners in Jakarta should consider; Bank Indonesia
Law, Information and Electronic Transactions (ITE) Laws and various currency legislation. He
also pointed out Bitcoin was not legal tender.
Bank Indonesia is working with the Ministry of Communications to learn more about the use of
digital currency in the country.
Sources: For further reading try NewsBTC, Indotelko and CoinDesk.
Payments Innovation Daily have recently covered Alibaba's Bitcoin Ban, China's Ban, India
Shutting Down Bitcoin Exchanges, and Singapore Open to Bitcoin.
23
10th January 2014 Share Article
Alibaba Ban Bitcoins
Alibaba Group Holdings will ban the sale of Bitcoin and other virtual currencies on its TaoBao
Marketplace following the central bank of China's tighter regulations and concerns about potential
money laundering and a perceived threat to financial stability. From the 14th of January 2014
there will be no further trading of Bitcoin and related products, including mining software and
hardware for the virtual currency.
Bitcoin was not previously an accepted form of payment on the website, with the vast majority of
transactions being processed through Taobao’s Alipay system. However, some merchants still
offered alternative means to accept Bitcoin as payments for their products or used their accounts
to sell units of the virtual currency.
Taobao's alignment with government concerns comes as Alibaba also presses on with stamping
out the sale of fake goods ahead of their pending IPO. Alibaba has been conservatively estimated
to be worth over $100 billion.
Sources: For further reading try Reuters, Bloomberg and The New York Times.
Payments Innovation Daily recently covered Alibaba's IPO and international expansion plans,
as well as China's ban on Bitcoin and a forecast crash for 2014.
24
30th December 2013 Share Article
India Shuts Down Bitcoin Exchanges
Multiple online Bitcoin exchanges in India have been suspended following a warnings from the
country’s central bank. The Reserve Bank of India (RBI) called the virtual currency a
highly speculative and unregulated instrument, cautioning users about the potential financial,
operational and legal security risks.
BuySellBitCo, India’s largest Bitcoin exchange shut down on Thursday, two days after the RBI
issued their public advisory notice detailing the risks of using digital currencies.
Following the shutdown the site may have violated local banking regulations by transmitting
money across borders.
The latest developments come a week after the Chinese government launched its own crackdown
on Bitcoin exchanges.
Sources: Read more at Wired.com.
Payments Innovation Daily recently covered China's Bitcoin ban, and Paypal President David
Marcus' bullish view on Bitcoin.
25
25th December 2013 Share Article
Singapore Open to Bitcoin Payments
Singapore's central bank has decided not to intervene in the use of Bitcoin transactions as an
alternative payment for goods and services.
The Monetary Authority of Singapore (MAS) told Singapore-based trading platform Coin Republic:
“Whether or not businesses accept bitcoins in exchange for their goods and services is a
commercial decision in which MAS does not intervene.”
Other countries have different views about the validity and use of virtual currencies:
The European Banking Authority has warned consumers on the risks of losing money
on virtual currencies as the currency is not regulated.
Norway has ruled that Bitcoin does not qualify as real money and it will be treated as an
asset on which capital gains tax can be charged.
The US is open to the currency but it wants to impose strict regulations.
China banned financial companies from Bitcoin trading.
Sources: Read more at International Business Times or Coin Desk.
Payments Innovation Daily recently covered Paypal President David Marcus' bullish view on
Bitcoin, China's Bitcoin ban, and adoption by Alliance Virtual Offices.
26
5th December 2013 Share Article
China Bans Bitcoin
Chinese regulators banned financial institutions from trading in Bitcoin last Thursday due to
concerns about its use in facilitating illegal activities and speculation. However, individuals are
still allowed to use Bitcoin at their own risk.
In response to this announcement, and further comments from Alan Greenspan calling the
digital currency a bubble, Bitcoin prices dropped to as low as $970.62 on Thursday after trading
at over $1,100.
The Central Bank of China said: "As Bitcoin transactions can be done anonymously and are not
restricted by location, it's difficult to monitor capital flows and it therefore facilitates money
laundering and financing for terrorist activities. There have been criminal activities using Bitcoins,
such as trading of drugs and guns. Relevant cases are under investigation."
Earlier in the week, in an interview with Bloomberg, Bobby Lee, CEO of BTC China - the nation’s
largest Bitcoin exchange - suggested that in China, "Bitcoin is not on the black list and it's not on
the white list. It's in the gray area." He said that recognizing and regulating the currency would
help to ensure that it's used for goods and services, rather than currency speculation.
Sources: Read more at Reuters, CNBC or The Verge, or watch the CNBC Report Video.
Payments Innovation Daily have recently covered Bitcoin Breaking $1,000, Bitcoins
Astronomical Appreciation in Value, and Canada's Robocoin ATM.
27
7th October 2013 Share Article
Bitcoin Rebounds After Plunge on Silk Road Charges
Despite an initial 20% ($500 million) drop
in value last Wednesday following the
closure of online marketplace Silk Road by
the FBI, the price of Bitcoin has largely
recovered, closing down 8.6% or $128
from $141 at start of trading.
For Bitcoin this is good news, as it
highlights the fact that despite its
reputation as being a currency associated
with organised crime, it is largely
independent of those types of activities.
The FBI criminal complaint unsealed last Wednesday notes "Bitcoins are not illegal in and of
themselves and have known legitimate uses. However, Bitcoins are also known to be used with
cybercriminals for money laundering purposes, given the ease with which they can be used to
move money anonymously."
Yet it highlights the still volatile nature - where Bitcoin trading is closer to stocks than stable fiat
currencies. It's strength - decentralised and non-government backed - is perhaps it's greatest
weakness at present.
Sources: Read the full story on WSJ, Financial Times, NYTimes, Wired Magazine and The
Conversation.
28
7th October 2013 Share Article
Global Regulatory Round Up
Key to the future legitimacy of virtual currencies is what next steps government authorities will take
to regulate, pseudo-regulate, or rule against.
Here's a synopsis of recent regulatory statements:
Germany (Aug): The Finance Ministry has formally recognised the digital currency Bitcoin
as a "unit of account" for private transactions, hence subject to tax. However companies
wanting to use it for commercial transactions will need permission from the Federal
Financial Supervision Authority (The Guardian)
Australia (Jun): the ATO's Michael Hardy states tax rules that apply to conventional
commercial transactions will generally apply in the same way to those conducted on the
internet or using modern payment systems (AFR)
Singapore: Virtual currencies do not fall under the regulatory ambit of the Monetary
Authority of Singapore - the current Act only regulates legally tendered bills. However, an
MAS spokesperson stated that consumers should be wary of such trading, as recourse
may not be possible (CIO Asia)
Thailand (Jul) - the Central Bank has issued a preliminary ruling against a Bitcoin
exchange operating in Thailand without a license, in effect rendering crypto currencies de
facto illegal due to a lack of existing laws and are withholding final judgement while it looks
into the matter further. (Quartz, TechinAsia).
And the Bitcoin community has decided that, despite its libertarian roots, the currency must engage
with governments:
UK (Sep) - there is still no recognition of the currency, but representatives met at Downing
St to advocate for regulation as a way to legitimise the currency amid talks that the
Financial Conduct Authority is considering regulation (The Guardian)
USA (Aug) - members of the Bitcoin Foundation met in Washington with regulatory
stakeholders (including FinCen, FBI, IRS, Federal Reserve) to discuss oversight
(Finextra). The NY Department of Financial Services is also considering issuing regulatory
guidelines (Bloomberg, AFR).
While traditionally cautious to react, so far actions taken by government authorities are the result of
monitoring closely for trading regulation, AML, and financial licensing breaches - instead of ruling
against the technology itself.
29
7th October 2013 Share Article
Bitcoin Buzz Grows Among Venture Investors Despite Risks
Investors expect Bitcoin to grow in popularity in businesses related to storage, payment
processing, remittance, and micro transactions according to Reuters. The key is finding the right
entrepreneurs to build consumer-friendly applications.
In Australia, advisory firm Woods & Kelkar has made the leap with first angel investment
in BitFash, which acts as an intermediary platform to allow global consumers to use Bitcoin to
purchase online from highstreet fashion retailers including Forever21 and ASOS.
Keyur Kelkar's investment thesis is that there are a lot of people who have made a lot of money
investing in Bitcoins, but have nowhere to spend it. They are typically male, tech-savvy and
between the ages of 18 to 40. Since launch in April, most buyers have been from the US, followed
by Asia and Europe.
Presenting recently at the Future of Digital Payments Conference, Woods & Kelkar believe that
investors had to work with the government to ensure the best possible regulatory process, which
in the next 5 years will create stronger exchanges and more merchant adoption, bringing in new
users. Read more about BitFash on TechCrunch and BRW.
In the US, Bitcoin start-ups raised nearly $12 million from VC investors in 7 deals in the three
months ended June, according to CB Insights. That compares with just five deals totalling less
than $2 million in the previous four quarters.
30
15th August 2013 Share Article
CBA Closes Accounts on Bitcoin Processor CoinJar
CoinJar, which offers tools to buy or sell Bitcoins and accept them as payment, has had it's
automatic payments processing facilities and business accounts closed by the Commonwealth
Bank.
Founder Asher Tan blogged he that he was frustrated that this happened without warning nor
explanation. Nor was he able to escalate in order to determine the reasons for the account
closure, which he suspects relate to concerns about Bitcoin.
Startup Smart reports that CoinJar received an email 5 days after the suspension, saying they
had received fraudulent payments. "But the percentage was in the low single digits, no different
from the industry standard" says Tan. Tan said he's always been up-front about the nature of
CoinJar's business and points out; that:
they process on average a 100 transactions a day, where most are under $100
they have experienced less than 10 fraudulent transactions, which they have just had to
wear the cost themselves
Meanwhile, NAB has picked up their business.
Sources: To learn more about this case, read on The Register,
learn about the resolution on Startup Smart, or the full details
on Asher Tan's blog at CoinJar.
31
13th August 2013 Share Article
Congress Starts Looking into Bitcoin
A Senate committee is pressing federal regulators
and law enforcement officials to explain how they
plan to oversee virtual currencies such as the four-
year-old, $1.2 billion Bitcoin marketplace.
The most immediate regulatory hurdles for Bitcoin
businesses involve registration and compliance
requirements from the US Treasury Department,
which is working to combat money laundering related
to drugs and terrorism.
Bitcoin is a digital virtual currency that can be traded on exchanges or used as a form of
payment. The total number of Bitcoins in circulation is capped at 21 million.
Sources: For further reading, click through to Zachary Warmbrodt on Politico. Michael Gormley
of Boston.com also offers a NY perspective, described as a ‘‘Wild West’’ of virtual currencies.
32
9th August 2013 Share Article
Court Rules Bitcoin is Real Money
Bitcoin allegedly has been used in a Ponzi scheme for a $7oM digital hedge fund, with the
defence arguing that Bitcoin is not real money and therefore did not constitute "securities".
However, Judge Mazzant has ruled that the SEC could proceed with a lawsuit, given:
"The only limitation of Bitcoin is that it is limited to those places that accept it as currency.
However it can also be exchanged for conventional currencies, such as the US dollar, Euro, Yen
and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in
BTCST provided an investment of money."
This ruling will have wide-reaching implications, may lend legitimacy to the virtual currency as
federal regulators are increasingly tasked with policing the currency.
Download a PDF of Judge Mazzant's ruling on Case No.
4:13-CV-416 (SEC v. Trendon T Shavers / Bitcoin
Savings and Trust).
Sources: Read more about the case on Forbes and IT
News. (Image credit: AP)
Recently in other Bitcoin news,
The Central Bank of Thailand became the first country to ban Bitcoins;
A number of Bitcoin participants formed to create a self-regulatory organisation called
the Digital Asset Transfer Authority (DATA)
Financial Industry experts predicted that Cryptocurrencies are the future of banking,
as it plays directly to the core competency of banks
The Chinese are the second largest market and are predicted to drive the next bull
market for Bitcoin
CoinLab will become an incubator for Bitcoin startups
33
4th August 2013 Share Article
Emerging Digital Payments Launch Self-Regulatory Group
Over 15 leaders from the emerging
payments and virtual currency industry
announced the formation of a committee
that will work towards establishing the
Digital Asset Transfer Authority (DATA).
With the rise of a parallel financial ecosystems that have created by virtual currencies such as
Bitcoin, Ven, and Ripple, this group seek to self-regulate and facilitate efficiencies, remittances
and financial inclusion as well as create technical standards, develop compliance programs and
licensing requirements.
However, the first priority is to address complex questions raised by governments on how to
respond to non-fiat backed currency with taxation, privacy, and top of mind - illegal money
laundering.
"For new payment technologies such as Bitcoin, Ripple, Ven and other digital currencies to realize
their full potential, making commerce cheaper and easier around the world, customers and
merchants will need to have trust in the integrity of the companies in the ecosystem," said Jeremy
Liew, Partner, Lightspeed Venture Partners.
Sources: Go to the website http://datauthority.org to read the manifest and founding members,
a statement from Ven founder Stan Stalnaker is on the Huffington Post, and you can read more
commentary about it on the Washington Post, Wall St Journal, and Payments Source.
34
2nd July 2013 Share Article
Winklevoss Twins Plan $20 Million IPO for 'Bitcoin Trust'
In a regulatory filing to the Securities and Exchange Commission late on Monday Cameron
and Tyler Winkelvoss, best known for their history with Facebook, have proposed a plan to
create a Bitcoin exchange-traded fund with an offering of 1 million shares to raise up to $20
million in capital.
While the trust has yet to be set up and many financial details remain to be filled in, they wlll
transfer their approximately $10 million Bitcoin portfolio (1% of the total stock) into this fund if
given SEC approval. ETFs usually tracks a basket of stocks or commodities, but in this case
would hold only Bitcoins.
This may mark a broader plan to legitimise the crypto-currency and remove the stigma from
increasingly regulatory questions and enforcement around the globe. Regardless of the SEC
outcome however, head of law firm Patton Boggs' emerging-payments practice Carol Van Cleef
states "As Bitcoin rises in popularity, you're going to see traditional financial products and
services being adapted to it."
Sources: Read the full story on the Financial Times, the New York Times Dealbook, view
the SEC application or watch an interview on TechCrunch.
36
Chapter 3:
Bitcoin ATMs
37
31st July 2014 Share Article
NZ Bitcoin Central Closes Bitcoin ATM in Auckland
New Zealand ATM operator Bitcoin Central announced that
they will shut down their Bitcoin ATM as the local banks
refused to provide the necessary facilities and financial
services. Bitcoin Central had only launched its
Robocoin two-way exchange machine at Auckland’s
Ironbar Cafe on 3rd June.
Bitcoin Central said on their website: "Unfortunately, despite complying with all the legal
requirements we have been unable to secure banking facilities. Without these the Bitcoin ATM
business cannot operate long term. The negativity from the banking sector to Bitcoin also
threatens the ATM owner's other businesses."
In late 2013, both the Reserve Bank of Australia and the Reserve Bank of New Zealand had
issued warnings about digital currencies and have taken steps to control Bitcoin development in
both countries.
Sources: Try the New Zealand Herald, International Business Times, or CoinDesk.
Payments Innovation Daily covered Bitmart NZ Debuts Virtual Currency Based Retailing, First
Bitcoin ATMs Unveiled in NZ, Australian Bitcoin ATMs Initial 100 Placements, and ABA
Unveils First Bitcoin ATM in Sydney.
38
10th June 2014 Share Article
Swiss Ban Bitcoin ATM in Zurich
The Swiss Financial Market Supervisory
Authority (FINMA) has requested Bitcoin
Suisse AG to suspend the launch of the
Bitcoin ATM in Zurich pending clarification
of open legal questions. Bitcoin Suisse has
also cancelled the other planned Bitcoin
ATM launches and halted services for their
existing ATMs.
Nevertheless, the Swiss Parliament is considering treating Bitcoin as a foreign currency. Luzius
Meisser, the Bitcoin Association Switzerland president, has stated that this proposal has since
been sent to a federal council after passing a preliminary vote, and the results could reopen
Bitcoin ATM services in the country.
Bitcoin Association Switzerland president Luzius Meisser believes that FINMA’s actions are not
as reactionary as many fear and suggested that the authority is simply following its usual course
of action when faced with new services and technologies.
Meisser said: “Should the federal council answer as suggested, that would immediately clarify a
lot of legal questions and put Switzerland into the pole position to becoming an international
centre for cryptocurrencies.”
Sources: For further reading try CoinDesk or Bitcoinx.
Payments Innovation Daily covered IRS Classifies Bitcoin as Property for Tax
Purposes, Japan Confronts Bitcoin Regulation in Wake of Mt Gox, Indonesia Warns
Bitcoiners, China Bans Bitcoin, India Shuts Down Bitcoin Exchanges.
39
17th April 2014 Share Article
ABA Unveils First Bitcoin ATM in Sydney
Australian Bitcoin ATM Technologies has
launched its first Bitcoin ATM in Sydney,
allowing users to buy and sell the digital
currency and exchange it for cash, despite
threats from the National Australia Bank that
it will close the accounts of businesses
trading in crypto-currencies.
Chris Guzowski, co-owner and the chief executive of ABA Technologies, announced: “Here we
have it in a Westfield shopping centre where it's available immediately and securely for everyone.
We want to allow every Australian to easily buy and sell bitcoin.”
The machine first requires presentation of photo ID, such as a driver's licence, which it then
matches using facial recognition technology. The user also scans their palm on the machine,
along with a PIN and phone number to verify their identity in future transactions.
ABA plans to install some 100 bitcoin ATMs by 2015 and over 500 ATMs around the world by the
end of 2016. ABA believes the lack of fees will make its bitcoin ATMs attractive to people
remitting funds to relatives and friends overseas. There is a daily limit of AUD 10,000 a day per
customer to comply with anti-money-laundering legislation.
Sources: For further reading try The Guardian, The Australian, Sydney Morning
Herald, International Business Times or view Introduction Video.
Payments Innovation Daily recently covered First Bitcoin ATMs Unveiled in New
Zealand, Australian Property Agent Forsyth Accepts Bitcoin, Bitcoin ATMs Open in Singapore
and Hong Kong, Australian Bitcoin ATMs Initial 100 Placements.
40
7th April 2014 Share Article
Bitcoin ATMs Unveiled in NZ
New Zealands first Lamassu Bitcoin
ATMs, operated by Bitto NZ, have
been unveiled at an event in
Auckland’s CBD.
The machines are one-way ATM which
only allow users to buy Bitcoin using
cash but not sell the digital currency or
withdraw New Zealand dollars. At least
eight other Bitcoin ATMs are planned
to launch in New Zealand with six in
Auckland, and two in Wellington.
Jonathan Ewing, co-founder, Bitto explained: “We don’t want to see them cash-out. There’s other
methods and ways for them to do that and we can point people in the right direction but we’re all
about helping people get into Bitcoin.”
People use the machines by scanning a QR code of their Bitcoin wallet and entering cash into the
ATM. Ewing adds: "[Using the machine] you immediately receive the funds in Bitcoin 30 seconds
later, with an up to 10 minute confirmation time."
Sources: For further reading try Tech Day, New Zealand Herald, News BTC, or International
Business Times Australia.
Payments Innovation Daily also covered Bitcoin ATMs landing in Australia, opening
in Singapore and Hong Kong, and Square Market accepting Bitcoin Payments.
41
4th March 2014 Share Article
Bitcoin ATMs Open in Singapore and Hong Kong
Lamassu Bitcoin ATM machines began operating in Singapore and Hong Kong despite concerns
about the Mt. Gox bitcoin exchange filing for bankruptcy protection and the announcement of
Singapore's finance minister that the central bank didn't recognise Bitcoin as legal tender. The
Lamassu ATM allows customers to swap their physical dollars for virtual bitcoin.
Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of Monetary
Authority of Singapore (MAS) said: "MAS currently does not regulate Bitcoins. They are not legal
tender like the notes and coins issued by MAS. They are also not considered securities under the
Securities and Futures Act".
The new machines have been deployed in the
following locations:
Dynasty Audio N Cameras
4Point3 Café
Afeita Pte Ltd.
Pic n Pixel Singapore Pte Ltd.
Raffles Link at Citylink Mall
The Spiffy Dapper
Sources: Read more at Business Week, Yahoo Singapore, News BTC or Wall Street Journal.
Payments Innovation Daily covered Lamassu Bitcoin ATMs arrive in Singapore, Australia's
first 100 Bitcoin ATMs and Singapore Open to Bitcoin Payments.
42
5th February 2014 Share Article
Lamassu Bitcoin ATM Arriving in Singapore
Singapore based Bitcoin Exchange has
purchased a Bitcoin ATM from British
Virgin Islands-based manufacturer
Lamassu for installation by April this year.
It plans to install more ATMs if the first unit
is well received.
The ATM will not charge a fee for each
transaction, instead making a margin by
supplying bitcoin at a premium to market
rates. The company is looking for a
location inside one of Singapore’s many
shopping malls.
Zann Kwan, Bitcoin Exchange director, said: “The good thing is that the Singapore government
has left bitcoin alone. It’s treated like silver or gold, and if you want to [deal in it] it’s at your own
risk. The ATM will create a lot more interest in bitcoin.”
Sources: For further reading try CoinDesk or AsiaOne
Payments Innovation Daily covered Australia's first 100 Robocoin ATM Placements.
43
3rd February 2014 Share Article
Australian Bitcoin ATMs Initial 100 Placements
Newly established Australian Bitcoin ATMs,
is planning to roll out 100 machines in
Australia over the coming months with the
first to be installed in Sydney and
Melbourne. Chris Guzowski, CEO of
Australian Bitcoin ATMs said the machines
will convert Bitcoin it into physical currency
on the spot.
The company website suggests a distribution agreement with Nevada based Robocoin. Taiwan
and Hong Kong will also be receiving the first batch of Robocoin ATMs destined for the Far East
later this month. It is not clear whether mainland China will get any bitcoin ATMs soon, given its
clampdown on bitcoin operators last month.
Jordan Kelley, Robocoin CEO commented: “Bitcoin demand in Asia is amazing. We have many
Asian countries seeking to enhance consumer capability to buy and sell bitcoin securely and
safely.”
Sources: For further reading try Stuff, CoinDesk, or listen to an ABC interview.
Payments Innovation Daily previously covered the Canada's first Robocoin ATM.
44
28th October 2013 Share Article
Canada's Robocoin ATM Redeems Bitcoins
Nevada based Robocoin is set to launch their first Bitcoin ATM on Tuesday 29th October
which will operate near the entrance of a downtown Vancouver coffee house. The machine
not only accepts cash for bitcoins, but also redeems bitcoins for cash. The company website
includes a demonstration video showing how the transactions are facilitated including
biometric authentication.
The device has a 3,000 Canadian dollars per day limit (US$2,900), compliant with Canada’s anti-
money-laundering laws. To buy bitcoins you need to do a palm scan before inserting the cash.
The machine then makes a trade on Canada’s VirtEx exchange and moves the bitcoin funds into
an online bitcoin wallet.
Sources: For further reading try Wired or CBC News.
Payments Innovation Daily recently produced a Virtual Currency Special Edition.
45
19th August 2013 Share Article
Bitcoin ATM Kicks Off 15 Unit Production Run
The Bitcoin ATM allows for the "Bitcoin curious" to walk into a convenience store, insert a small
amount of money and get the feel for the technology, without taking any real risk of loss.
The devices are nearing production and CEO Zach Harvey expects a preliminary run of 15 units
to ship in September and further pre-orders to ship by the end of the year.
Lamassu’s cash-to-Bitcoin device has garnered
substantial media attention over the past months
and as a result Lamassu has received, “over
150 inquiries from all over the world” for their
Bitcoin Machine, according to Harvey.
Sources: Further reading, including YouTube
video of the start-up pitch at PR Web.
47
Chapter 4:
Merchant Adoption
48
22nd May 2014 Share Article
Bitmart NZ Debuts Virtual Currency Based Retailing
Online virtual currency based retailer Bitmart has launched in New Zealand. The store,
Bitmart.co.nz, is committed to stocking a huge variety of snacks, electronics and household
consumables previously unobtainable through Bitcoin in NZ.
Store founder Chris Dawson, said: “The sheer volume of orders and positive feedback received in
the short time since launch genuinely blew away all my expectations. The enthusiasm of the
growing Bitcoin community and their eagerness to help establish a thriving digital currency
economy in New Zealand really solidifies my belief that Bitcoin is here to stay.”
Bitmart also accepts Dogecoin, a digital currency, as payment for its goods. According to a press
release, Bitmart is based in Christchurch, New Zealand, and has become the first online store to
accept digital currency in the country.
Sources: Read more at Coin Report or Scoop.
Payments Innovation Daily covered First Bitcoin ATMs in NZ, ABA Unveils First Bitcoin ATM
in Sydney, and Australian Property Agent Forsyth Accepts Bitcoin.
49
31st March 2014 Share Article
Australian Property Agent Forsyth Accepts Bitcoin
The Sydney-based property broker Forsyth Real Estate announced that they will accept property
deposits and payments in bitcoin through Melbourne-based Bitcoin exchange CoinJar.com. The
exchange calculates payments in real time so Forsyth receives the correct amount in the local
currency. The transactions, subject to a 0.5 percent exchange fee paid by those making the
payments, are still subject to Australian taxes according to Forsyth’s spokeswoman Hayley
Johnston.
Hayley Johnston, commented: “We’ve taken on bitcoin due to the influx of lots of prospective
buyers from overseas on the Sydney market. We want to make it as easy as possible especially
for Chinese investors. It’s cheaper and easier because it takes out the middle man, takes out the
fees and charges associated with more traditional forms of payment like bank transfers.”
According to the Foreign Investment Review Board, Chinese buyers overtook the US to become
the biggest real estate investors in Australia in the year ended June 30, reaching AUD 5.9 billion
in residential and commercial property.
Sources: Read more at The Sydney Morning Herald or Businessweek.
Payments Innovation Daily covered Indonesia Bank Warns Bitcoiners, China's Bitcoin
Ban, India Closes Bitcoin Exchanges, Singapore Open to Bitcoin, Australia Bitcoin ATMs
Initial 100 Placements and MtGox Bitcoin Exchange Bankruptcy Rumours.
50
17th January 2014 Share Article
Chicago Sun-Times and BitWall Trial Bitcoin Paywall
The Chicago Sun-Times, the 9th largest
newspaper in the USA, will test a social
paywall from BitWall that will accept both
Tweets and Bitcoin.
For 24 hours on February 1st, 2014, if readers
want to read articles they can either donate
Bitcoins to or Tweet about the Taproot
Foundation via the paywall.
BitWall CEO Nic Meliones said: “The Chicago Sun-Times is showing its technological
leadership by being the first major newspaper to adopt a social paywall and Bitcoin-powered
monetisation strategy.”
Jim Kirk Publisher/Editor and Chief of the Chicago SunTimes, said: “We continue to
experiment and test new technologies that we believe engage our readers and look forward to
being the first major USA newspaper to test a Bitcoin-based paywall.”
Sources: Read more at The Domains, Business Insider, Mashable or Chicago Ist.
51
6th January 2014 Share Article
Bitcoin Breaks $1000 on Zynga Announcement
San Francisco-based Zynga announced it will be accepting Bitcoin for some online social games
generating renewed optimism the digital money will become more widely used. Following the
announcement Bitcoin values surged to $1,119 on the exchanges.
Dani Dudeck, a spokeswoman for Zynga, confirmed plans to test Bitcoin payments by the
company on the reddit.com community website. Players will be able to pay via the BitPay
payments service for players of FarmVille 2, CastleVille and other games.
Nicholas Colas, chief market strategist at ConvergEx Group commented: “Bitcoin has been
remarkably resilient in the face of all the bad news out of China. The strength shows a continued
interest, which is a very positive sign.”
Sources: For further reading try Bloomberg.
Payments Innovation Daily recently covered Bitcoin Forecast to Crash in 2014, India's
closure of Bitcoin exchanges, and Singapore's open stance on Bitcoin.
52
7th October 2013 Share Article
Sydney Pub Accepts Bitcoin for Beer
What's the going rate for beer in Bitcoins? About 0.05 Bitcoins, equivalent to AU$7.
The Old Fitzroy, a historic pub in Sydney's Woolloomooloo, began accepting Bitcoin on Sept 29.
He uses a QR Codes system which scans smartphones and deducts payment from their Bitcoin
wallets to handle transactions.
"I am interested in Bitcoin because it is progressive" said hotel proprietor Garry Pasfield. When he
first installed EFTPOS and ATMs in his pub, he never thought people would use it.
While still far from ubiquitous, offline acceptance of Bitcoin Payments is anecdotal in Australia
with jewellery store Merrin & Gussy and private meetup groups, but where traction may take off is
through online retailing - including UndieGuys, HonestBeef.com, Cufflinked, DigiDeals and
BitFash (see next article).
Australia ranks number 7 globally in number Bitcoin Wallet downloads in the year to date, with
US taking the number 1 spot followed by China as the second largest market.
Sources: Read the full story on AFR, or more on ZDNet and News.com.au
54
Chapter 5:
Consumer Products
55
21st May 2014 Share Article
Eaze Enables Bitcoin 'Nod to Pay' on Google Glass
Dutch start-up Eaze has introduced a new
Eaze Glassware app for Google Glass that
allows users to make bitcoin payment using
their “Nod to Pay” feature.
After a user downloads the app to their device,
they will have the option to link up an existing
bitcoin wallet to Eaze.
A merchant that accepts bitcoin generates a QR code for the transaction (using Bitpay or another
bitcoin POS provider), and then presents that code to the user. Google Glass's camera then
scans the QR code and a 'head nod' by the wearer completes the mobile payment transaction.
At this point in time the feature can only be used in stores that accept Bitcoin. Presently, Eaze
supports Blockchain.info and Coinbase. Eaze is planning to add another layer of security by
allowing the user to set a spending limit that cannot be altered without a PIN.
The company is also planning to add support for currencies like Dollars and Euros in addition to
linking the app with PayPal in the future. They are also planning to bring this payment technology
to other wearable gadgets like smart watches and bands.
Eaze co-founder Raimo van der Klein commented: “We are in talks with wallets that handle FIAT
currencies. It all depends a bit on the right API’s. But we expect this summer to add the first.”
Sources: Read more at International Business Times, TechCrunch or watch promo video.
Payments Innovation Daily covered Google Glass Integrates Wallet App, Google Glass Banking
Apps, Square Market Accepts Bitcoin Payments, and Bitcoin Forecast to Crash in 2014.
56
25th April 2014 Share Article
Xapo Offers Bitcoin Debit Card
Xapo has unveiled a Bitcoin debit card that
will let users spend their bitcoin anywhere in
the world where MasterCard is accepted
both online and in stores. The Xapo debit
card will function like a normal debit card,
except backed by bitcoins instead of
traditional currency, and linked to the
customer’s Xapo Wallet.
Wences Casares, the founder and CEO of Xapo said: “We are focused on making bitcoin more
secure and safer and making it easier to use, the debit card is something that our customers have
requested”.
Xapo plans to ship out cards in two months and expects to use the payment networks of both
Mastercard and Visa, with partnerships with banks in the US and Europe. However, Mastercard
have stated they do not have a relationship with Xapo and they have no knowledge of the
company’s planned product launch.
A digital version of the card for online retail will be free, while a physical card for swiping at brick-
and-mortar stores will cost $15.
Sources: For further reading try Xapo Blog, Wall Street Journal, Gigaom, Tech Hive, Coin
Desk or Xapo Debit Card.
Payments Innovation Daily recommended reading:
Cryptex Launch Bitcoin Debit Card
Nio Card Supports Bitcoin Payments
SmartMetric Biometric Bitcoin Card
Mt.Gox Introduces One-Time Password Card.
57
10th April 2014 Share Article
Cryptex Launch Bitcoin Debit Card
Hong Kong based Cryptex have launched Cryptex Card, a ‘bitcoin ATM debit card’ that can be
used at existing ATMs in 80 different countries, including 90 percent of the ATMs in the United
States via the Discover Network.
Once shipped to the customer, the card can be loaded online by sending Bitcoins to a Cryptex
address assigned to the card. A specified amount of Bitcoins can then be converted into local
currencies, which can be withdrawn from ATMs. Cryptex make profits like a money transmitter on
the exchange rate.
Jamon Rahn, Cryptex co-founder, said: “This is a
huge development for Bitcoin, because Bitcoin
ATMs are sparsely located and Bitcoin exchanges
make withdrawal a burdensome affair.”
Sources: Read more at GIGAOM, Examiner,
CoinDesk or watch promo video.
Payments Innovation Daily recommended reading:
Square Market Accepts Bitcoin Payments
Australian Property Agent Forsyth Accepts Bitcoin
IRS Classifies Bitcoin as Property for Tax Purposes
Bitcoin Core Fix for Transaction Malleability Flaw
MtGox Bitcoin Exchange Bankruptcy Rumours
58
13th January 2014 Share Article
SmartMetric Biometric Bitcoin Card
SmartMetric have announced plans to
launch a SmartMetric Biometric Bitcoin
Card in the first quarter of 2014.
The card will be capable of real-time peer-
to-peer transactions including bitcoin as
well as standard payment transactions,
and will be compatible with standard
ATMs around the world.
SmartMetric President and CEO Chaya Hendrick said: “SmartMetric’s bitcoin card can
significantly accelerate the growth and rate of adoption for bitcoins as the new global currency. By
applying our patented biometric technologies to a bitcoin payment card, we offer the world’s first
fingerprint-secured method to safely store and use bitcoins.”
The card will have an internal ARM 9 processor, between 8GB and 128GB of memory, and its
own operating system for stand-alone on-card processing.
Sources: For further reading click through SmartMetric or Biometric Update.
Payments Innovation Daily recently covered the SmartMetric Biometric Card production for
large quantity sales in the first quarter of 2014.
59
29th November 2013 Share Article
Bitcoin Exchange Mt.Gox
Introduces One-Time Password Card
Bitcoin exchange Mt. Gox has
introduced a physical one-time password
card (OTP) for users to strengthen the
security of user accounts. The battery-
powered card is linked to a user’s bitcoin
account and used as an additional layer
of security by storing a unique password
or generating a new one.
The password is required when users perform actions such as logging in or initiating a withdrawal
online. The card is available now from Mt.Gox with price of $39.99.
The Mt. Gox exchange stated that: "With Bitcoin prices at record highs you can never be too
careful with maintaining account security. Malicious parties can compromise your login
information if you aren't careful, but by using a one-time password (OTP) you can prevent anyone
from being able to use that information to access your account."
As Bitcoin becomes more widely accepted, Mt. Gox has also launched Bitcoins.com, a Bitcoin
information site to introduce the virtual currency to more people.
Sources: For further reading try Coin Desk or Mt.Gox.
Payments Innovation Daily have previously covered virtual currency Bitcoin's price
peak in Bitcoin Breaks $1,000 for First Time.
60
29th November 2013 Share Article
Nio Card Supports Bitcoin Payments
The Nio card, from start-up Bluenio, has
now been enhanced with the ability to
transfer Bitcoin payments using NFC. To
send or receive BitCoins, users just need
to tap the Nio card against an NFC-
enabled smartphone.
Currently Android smartphone users can
use Bitcoin wallet apps to pay and
receive funds via NFC.
However, Nio card allows owners of iOS devices without built-in NFC technology to enjoy the
same convenience.
Bluenio co-founder Ben Hounsell said: “It’s a cool way to provide secure Bitcoin payments in a
way you currently can’t do. The way of making a Bitcoin payment right now can be a little bit
convoluted, or certainly not as easy as making a traditional chip-and-PIN payment or a tap. You
have to scan a QR code, read it in, validate the payment, enter private keys… it can be quite
irritating. Having a card where you tap to make a payment securely bring Bitcoin in line with more
conventional ways of making payments.”
In the future, Bluenio also wants to partner with Google Wallet and PayPal to expand their
wireless payments option beyond Bitcoin.
Sources: Read more at Gigaom or Digital Trends.
Payments Innovation Daily have previously covered the Bluenio NFC Smart Card
62
Chapter 6:
Online Facilities
63
16th May 2014 Share Article
CoinJar Adopts BPAY for Bank Transfers
Australia based bitcoin wallet and exchange service CoinJar is switching to electronic bill payment
system BPAY for their ‘Filler’ balances from bank transfers.
CoinJar had found that bank transfer related issues account for over 25% of help requests from
their customers. CoinJar explained that via “BPAY Customer Reference Number” and “Biller
Code”, customers are now able to recharge the personal Filler from any mobile or internet
banking app. Each CoinJar user is assigned a unique BPAY reference ID that is created when the
user creates a new Filler deposit. After that users are able to use it through online banking
services by choosing the ‘Pay with BPAY’ option.
In order to make BPAY deposits, users need to have verified their identity. However any user who
does not wish to reveal or verify their identity will still be able to use CoinJar to send and receive
Bitcoins.
Sources: Read more at CoinJar or CoinDesk.
Payments Innovation Daily covered Australian Property Agent Forsyth Accepts
Bitcoin and Australia Bitcoin ATMs Initial 100 Placements.
64
16th April 2014 Share Article
Facebook E-Money Seeks Approval in Ireland
Facebook is close to getting regulatory approval in Ireland for an e-money service according to
the Financial Times. Facebook is also said to have had talks with at least three London start-ups
offering international money transfer services online and via mobile: TransferWise, Moni
Technologies and Azimo.
According to legal experts, obtaining an e-money authorisation in Ireland would require Facebook
to hold capital of €350,000 and segregate funds equivalent to the amount of money issued. Both
Facebook and the Irish central bank declined to comment.
Authorisation from the central bank to become an “e-money” institution would allow Facebook to
issue units of stored monetary value as a claim against the company. This e-money could be
used throughout Europe in a process known as “passporting”.
Sources: For further reading try Reuters, The Next Web or The Irish Times.
Payments Innovation Daily suggested reading:
UK Payments Council Launching Paym P2P Payments
Royal Bank of Canada Launches Facebook Payments
KLM Airline Payments via Facebook and Twitter
POLi Payments Launches Facebook Payment
Requests ICICI Bank India Launches Facebook Banking
65
2nd April 2014 Share Article
Square Market Accepts Bitcoin Payments
Square has announced that Square Market will be facilitating bitcoin payments for trading goods
and services via the service, with transactions processed by bitcoin exchange Coinbase. There
will be no fees associated with bitcoin payments for either seller or buyer. The selling party will
automatically get the amount for whatever they sold in USD.
Buyers wanting to pay with the Bitcoin option must:
Generate a new bitcoin address
Enter an email address to receive order details and receipt
Submit the bitcoin payment within 10 minutes, or the order will expire
Confirm payment. Buyers with a mobile wallet open and scan the QR code, while hosted
wallet users will receive instructions for entering the information.
Square checks receiving address was funded and validates payment
Advance to the confirmation page
During this time, Square will continually monitor the checkout process to ensure that they knows
when the payment is received.
With this new feature Square Market will compete with Shopify, Balanced and Stripe who have
both added bitcoin in their wheelhouse of merchant payment options.
Sources: For further reading try Square, Examiner.com, CoinDesk or TechCrunch.
Payments Innovation Daily suggested reading:
Square Considering 2014 IPO
Australian Property Agent Forsyth Accepts Bitcoin
IRS Classifies Bitcoin as Property for Tax Purposes
MtGox Bitcoin Exchange Bankruptcy Rumours
66
21st March 2014 Share Article
Bitcoin Core Fix for Transaction Malleability Flaw
The Bitcoin Core Development Team have released Version 0.9.0 of their "Bitcoin Core" software,
which incorporates five separate fixes for "transaction malleability", the weakness that contributed
to the downfall of Mt. Gox, formerly one of the world’s largest exchanges for the digital currency.
Transaction malleability relates to the potential for mining and relay of "mutated transactions",
which has been addressed via tighter transaction rules. According to core developer Wladimir van
der Laan, the latest version automatically supplies a refund address. Payment requests can also
be cryptographically signed to ensure the bitcoins are going to the intended recipient.
Developers creating bitcoin compatible software are advised to incorporate the software changes
into their own “wallets”, software programs for holding and transferring bitcoins, and other
payments applications.
Sources: For further reading try PCWorld, Ars Technica or Bitcoin’s Release Notes.
Payments Innovation Daily covered MtGox Bitcoin Exchange Bankruptcy Rumours, Indonesia
Bank Warns Bitcoiners, China Bans Bitcoin, India Shuts Down Bitcoin Exchanges and Bitcoin
Forecast to Crash in 2014.
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23rd January 2014 Share Article
Ebay's New Virtual Currency Category in UK and US
eBay is launching a dedicated Virtual Currency category on eBay Classified Ads. eBay
Classifieds provides a free platform for local buyers and sellers to connect, but does not
participate in the transactions. All transactions must be settled outside of eBay.
eBay UK spokesman Steve Heywood told CNET in an e-mail that this policy is effective
immediately to the US and from 10th February to the UK.
Ryan Moore, Manager of Business Communications at eBay, said: “To promote a trustworthy
marketplace and ensure compliance with applicable regulations, eBay is currently updating its
Currency Policy. The updated policy will clarify that listings for Bitcoin and other similar virtual
currencies must be listed in the Virtual Currency Category in the Classified Ad format.”
Sources: Read more at CNET or CoinDesk.
Payments Innovation Daily also covered Paypal's David Marcus on Bitcoin.
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18th December 2013 Share Article
Alliance Virtual Offices Enables Bitcoin Payments
Alliance Virtual Offices, a virtual office e-commerce platform, have enabled Bitcoin as an
alternative payments method. This will enable Alliance Virtual Offices clients around the world to
use Bitcoin for transactions without exchange rate fees.
Frank Cottle, chairman and founder of Alliance Business Centers and CEO of Alliance Virtual
Offices said: “When we recognized Bitcoin’s growing impact on the digital payments industry, we
moved swiftly to add this alternative currency to our payment options for global clients. We expect
to see more virtual office users at home and abroad opt for virtual payment solutions like Bitcoin
in 2014 and beyond.”
Alliance Virtual Offices was launched by the founder of Alliance Business Centers in 2010, with
the focus on people, place and technology. They have more than 600 locations around the world
now.
Chris Steele, co-founder of Alliance Virtual Offices
said: “I’ve been watching Bitcoin for years and I
believe it will play an increasingly larger role in e-
commerce in the months and years ahead.”
Sources: For further reading try PR Web or
watch the promo video here.
Payments Innovation Daily have recently covered Paypal President David Marcus' bullish view
on Bitcoin and China's Bitcoin ban.
69
26th November 2013 Share Article
Amazon Launches Coins Virtual Currency in UK
Amazon has launched its Coins virtual currency
payments scheme in the UK, following on from
the US launch in February 2013.
Kindle Fire tablet owners can purchase Amazon
virtual coins and redeem them to buy apps,
games and in-app items on the Amazon.co.uk
Appstore.
Mike George, VP of apps and games at Amazon said, "Today we are giving Kindle Fire owners
£4 worth of Coins to spend on new apps and games, such as Candy Crush Saga and Angry Birds
Star Wars. And with discounts of up to 10 percent when you buy Coins in bulk, this is a great way
for customers to save money when they buy apps, games and in-app items."
According to the Amazon, one Amazon Coin is fixed in value at one cent. Amazon Appstore
developers will earn a standard 70% revenue share when customers make purchases using
Amazon Coins.
Sources: Read more at The Paypers or The Inquirer.
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6th November 2013 Share Article
Infobip Launches 'Yen Coins'
Mobile services cloud company Infobip has launched
¥Coins (pronounced Yen Coins), a virtual currency for
Japanese mobile users. The intention is to create a
mobile payments gateway for app developers to sell
their products to Japanese consumers.
Japanese laws require a local business presence in order to start a paid content service. Infobip
claims it is the first international payments provider to offer virtual currency to companies without
a presence in Japan.
Paolo Rizzardini, Infobip’s vice president of mobile payments said: “YCoins are a virtual currency
associated to Yen value 1 to 1, this guarantee the Japanese users about the value of the currency
during the time and avoid the value fluctuation typical of Bitcoin that is a must for each merchant
that has to be sure about the amount they will receive.”
Japanese mobile users will be able to purchase ¥Coins through direct operator billing, top-up
scratch cards or online with credit cards.
Sources: For further reading try Tech Crunch.
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15th September 2013 Share Article
Facebook Drops Virtual Currency
Facebook Payments will be reverting to
local currencies following a decision to
sunset their virtual currency
credits. Fluctuating exchange rates for
international payments were proving to
be too difficult to manage.
The virtual currency was launched in June 2011 at 10c per credit with the intent to earn a margin
on games played via its website. The concept was working well within the US, but following
expansion of these services internationally, it has proven to be impractical.
Sources: For further reading on these developments try Tech Crunch.
73
Chapter 7:
Opinions & Debate
74
16th January 2014 Share Article
10 Digital Payments Predictions for 2014
Business Insider Intelligence had published 10 predictions regarding digital payments for 2014
based on industry observation:
1. NFC will die. Consumers will ultimately decide whether NFC will become popular, and so far
the technology isn't proving compelling enough to spur widespread adoption.
2. Bluetooth Low Energy will conquer retail. From the perspective of the consumer, the
technology is superior to NFC because it doesn't require close proximity for payments, and BLE-
powered payments can happen nearly automatically.
75
3. Bitcoin hype will die down. Individuals and businesses will be able to transact in bitcoins
across the globe without worrying that the value will collapse before they can exchange it for
another currency.
4. Amazon will try to make friends with offline retailers. Acquiring GoPago, Amazon may be
planning to expand its payments offerings into the world of bricks-and-mortar retail, where Apple's
outpacing competitors in number of accounts
5. The payments industry will consolidate. Expected to be a bevy of acquisitions and a handful
of IPOs, including Square's.
6. Carrier billing is going to explode in emerging markets.
7. Square will sputter in POS market share and e-commerce objectives.
8. The mobile wallet is going to be dramatically reconceived.
9. Banks competing for mobile & online audiences with beefed up personal banking apps.
10. Mobile commerce will account for a third of holiday shopping in 2014.
Sources: For further reading click through Business Insider
76
14th January 2014 Share Article
Seven Limitations of Bitcoins
Bitcoin is gaining legitimacy as an alternative currency, but for all its popularity, the it has many
limitations, as Payments Source have summarised:
Instant Payments: Bitcoins typically takes over 10 minutes to clear a transaction, which
must be recorded on a public ledger called the blockchain.
Chargebacks: Consumers can't unilaterally undo a Bitcoin transaction like they can a
credit card payment.
Pay Taxes: Governments typically do not accept taxes in anything other than the official
currency.
Money Laundering: Since each transaction is recorded publicly, Bitcoin users are
establishing a trail that anyone can follow.
Mortgages: Regulatory issues and the volatility of Bitcoin's value preclude mortgages
priced in the virtual currency.
Lend Money into Existence: Because there is a fixed supply of bitcoins, it's impossible
to simultaneously store a bitcoin in a blockchain address and lend it out.
Avoid Infringement Claims.
Sources: For further reading click through to Payments Source.
77
3rd January 2014 Share Article
10 Product Innovations to Watch in 2014
eWeek have released a short slide show of top
technologies to watch in 2014 in which mobile
payments and related products feature
prominently.
According to eWeek US start-up Square is
currently leading the way in mobile payments and
will likely go public in 2014, putting its mPOS
reader and other technologies front and center.
Bitcoin digital currency was also a hot-button topic in 2013 and is expected to continue into 2014.
However, there has been a lot of concern among currency regulators and law enforcement
agencies about Bitcoin's stability and its use in illicit markets.
The eWeek technology watch list includes:
Google Glass
Other Wearable Computers
Mobile Payment Providers
Fibre Service for the Consumer
Intelligent Home Products
Game Consoles
4K TVs
A New Era of Desktops
Encrypted Digital Currency
Amazon Prime Air
Sources: For further reading click through to eWeek.
78
31st December 2013 Share Article
Bitcoin Forecast to Crash in 2014
Kaspersky Lab's head of the Global Research and Analysis Team in Latin
America, Dmitry Bestuzhev, has predicted that BitCoin will collapse in value in 2014. He
commented that while the crypto-currency itself will remain intact, confidence and economic
forces may adversely impact the value of BitCoins going forward.
Dmitry cites increased technical attacks against BitCoin mining, the use of malware in stealing
BitCoins from user wallets, and regulatory steps governments may take as factors that will impact
demand for the currency in the future.
Although in circulation for many years BitCoins were effected by a popularity boom in 2013 which
sent values soaring above USD 1,000. Many retailers worldwide have chosen to accept the digital
currency while federal governments have raised concerns about risks and regulation.
Sources: Read more at Security Watch.
Payments Innovation Daily recently covered India's closure of Bitcoin exchanges,
and Singapore's open stance on Bitcoin.
79
11th December 2013 Share Article
Paypal's President David Marcus Bullish on Bitcoin
At the LeWeb conference in Paris, David
Marcus, PayPal president said that Bitcoin
is good idea, but that it's not a currency.
He predicts that Bitcoin would have a
better chance at revolutionising commerce
than the NFC tap-to-pay
technology. Marcus stressed that he likes
Bitcoin and also owns some himself.
David argued that consumer understanding of Bitcoins is poor and that PayPal is not yet ready to
let people link their Bitcoin wallets with their PayPal accounts. He said: “People are confused.
They think because it's called cryptocurrency it's a currency. I don't think it is a currency. It's a
store of value, a distributed ledger.”
Although he has some concerns about Bitcoin, he's unequivocal about near-field communications
(NFC). He thinks that tapping to pay by NFC is not better than swiping or using a PIN pad. He
said it's not a question of whether people at a payment terminal would prefer to tap or swipe, but
whether they want to go to a payment terminal at all.
Marcus concluded that, in the near future, retail chains will have to reinvent themselves and their
payment systems. He said: “They'll be showrooms where people can check out products then buy
them later online. They'll be logistics centers where people can pick up items quickly that they
ordered online. They'll be warehouses from which companies can ship products quickly to online
purchasers.”
Sources: For further reading try C-Net.
80
30th October 2013 Share Article
Bitcoins Astronomical Appreciation in Value
A 29 year old Norwegian man has purchased an apartment in central Oslo using funds redeemed
from a $27 bitcoin deposit made four years ago. The bitcoins had since risen in value to
$725,600.
According to reports engineer Kristoffer Koch made the investment out of curiosity when he was
studying encryption four years ago. He was only reminded of his investment while reading an
article on the soaring value of Bitcoins in April this year. However remembering the password to
his Bitcoin account was a challenge.
One of the contributing factors in the astronomical appreciation has been the limited number of
bitcoins in circulation and in built controls that limit the creation of new bitcoins. Also reported this
week, Bitpay took a $1 million down payment on bitcoin mining hardware designed to ‘unlock’
new bitcoins and increase circulation.
Sources: For further reading about the Koch story try Sydney Morning Herald.
Payments Innovation Daily also covered the installation of the first Bitcoin ATM that accepts and
redeems bitcoin, installed at a café in Vancouver during the week. For further reading, review
our Virtual Currency Special Edition.
81
15th October 2013 Share Article
CeBIT Conference 2013: Start-ups and Innovation in Payments
The CeBIT conference included a number of innovation themes including Bitcoin virtual currency
and a panel discussion on “Payment Disruptors and the Banking Industry”. According to the
panel, Banks must collaborate with start-ups and be open to disrupting themselves if they want to
survive. Panellists also agreed that innovation can come from businesses of all sizes.
Following the conference program CeBIT held a start-up pitching event with five different concept
pitches. The winner of the event was Ingogo for their taxi payments app. In other news Ingogo
Founder and Managing Director Hamish Petrie has commented on their global expansion plans
and a recent $1m capital injection bringing total investment to $3.7 million to date.
Sources: For more commentary on the innovation panels try IT News or CIO. For further reading
about the start-up challenge and contestants try the Financial Services Club or the CeBIT
Conference Blog.
82
7th October 2013 Share Article
Money2020 Conference
6-10 Oct, Las Vegas - Bitcoin dominated
day one of Money2020 conference,
currently running in Las Vegas, with
debate around virtual currencies and the
evolving regulatory framework.
Highlights from the Bitcoin Panels:
On Visibility:
"unlike previous landmark cases, such as those against e-gold or liberty Reserve, the
authorities had not acted against the technology in this instance but against the
individual."
- Carol Van Cleef, partner of law firm Patton Boggs
"It's a great day for Bitcoin. The price dropped but then it bounced back. It removes the
red herring of Silk Road from Bitcoin. It's a terrible tool for criminals - transactions can be
traced back to the point Bitcoin is mined."
- Constance Choi, general counsel at Payway
On Volatility:
Identified need for more financial tools to smooth fluctuations in the value of the digital
currency - such as options and hedging instruments in traditional FX markets - that allow
businesses to take risk from their transactions.
On Usability:
The search for Bitcoin's "Killer App" is not restricted to money. Many different services
and utilities can be layered on top of Bitcoin, adding value in different use case scenarios.
On Investability:
VCs were sceptical of the timeframe, when asked if they could foresee making an
investment of $25 million in any Bitcoin-based venture in the next 2 years.
Sources: Learn more about Money2020, or read the full coverage in Finextra here and here.
83
7th August 2013 Share Article
New Vision of Banking's Future
American banker asked financial industry thought leaders what they thought the future of banking
is going to look like, here are some highlights:
24 hour banking: will centre around simplicity delivered through a mobile device, as part
of our daily activity
Smaller, but more important branch networks: more customers will choose their banks
based on availability of a branch that they don't plan to use that much - but it will be there
will live bankers if and when they need it.
Reputational / trust banking and people authenticators: where the most valuable
asset will be personal data, and the bank's critical role will be to build on customer
identities
Engagement and consultative banking: to businesses and individuals, where the key
word is 'need', if a customer is satisfied, he or she will not shop around and is willing to
allow you a profit,
Tivo for your finances: a service that assembles and manages a portfolio of accounts
from a single portal that will disintermediate banks' relationship with customers
The long tail model: where interoperability and hyper connectivity create a dramatically
different model, capable of capturing lots and lots of tiny revenue streams
Cryptocurrencies: play directly to the core competencies of banks, while the market is
nascent and still maturing, it is the perfect time to exert a leadership role and show the
service newbies how it's done.
Collaboration is Key: smart bankers will partner with startups to provide together what
neither can do alone, and to enter seemingly unrelated businesses
Sources: For more insights that aren't listed here take a look at American Banker's slideshow.
84
Conclusions
The past year has been a tumultuous time for virtual currency. The dramatic appreciation in the
value of Bitcoin has brought the topic into general public awareness. Supporters talk about the
loss in confidence with fiat currencies, banks and government regulation in the wake of the global
financial crisis. Detractors talk about the anonymity of the currency helping to facilitate illegal
trading activities and the need for regulation.
Whether or not there is a growing demand for virtual currency is without question. However for
mainstream commerce it remains to be seen if it becomes more than just a passing fad. Adoption
by merchants seems more likely aimed at gaining publicity for business rather than facilitating any
real payments need.
Average consumers are perhaps more influenced by the stories of fortunes made holding Bitcoin
rather than wanting to have it available as a means of payment. If not purchased in the hope of
striking it rich, it is perhaps being purchased simply as an interesting topic for BBQ discussions.
Individuals that have those small ATM receipts in their wallets indicating their bitcoin assets are
perhaps seen as forward thinking, technology savvy, and hip … and if they purchased Bitcoin four
years ago, you would be hard pressed to see it otherwise.
Venture investors have been attracted with all manner of innovative ideas leveraging the growing
interest in virtual currency. Governments and regulators on the other hand are busy trying to
understand it and to develop an appropriate position and effective legislation. With different
countries apparently taking opposing views it remains difficult to see a consensus forming.
The coming year promises to be just as eventful. As the story continues to unfold keep up to date
with ongoing coverage in our FREE Payments Innovation Daily newsletters.
If you have any feedback or you are interested in placing advertisements or contributing feature
content in our next topic compilation reports contact our editorial team.
Regards
Payments Innovation Daily Editorial Team
86
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6th August 2014 Share Article
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6th August 2014 Share Article
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6th August 2014 Share Article
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