When people say someone is as “rich as Croesus,” they’re talking of to a time (B.C. time) when gold was first starting to be used as a currency. A time when Croesus of Mermnadae, the last King of Lydia, had accumulated an ungodly amount of gold that was made from Lydian merchants.
And then there’s 2015.
Just when the payments dialogue is dominated by talk of mobile payments, NFC-chip enabled cards and digital currencies, somehow the oldest standard of currency has finagled its way back into the newest form of payments by redefining the meaning of “the gold standard.”
Yep, we’re talking bitcoin.
That’s what’s happened this week as a result of a partnership between digital currency company Bitreserve and Gold Bullion International. This partnership, according to a Forbes piece on the subject, “allows customers to store gold in their accounts and convert it to Bitcoin for online purchases.” While other global currencies have shied away from using the gold standard, Bitresterve is attempting to help bitcoin go more mainstream. As bitcoin has been under an immense amount of regulatory pressure and has a history of raising suspicion among those looking to invest in the unpredictable cryptocurrency market, bitcoin could use a reliable partner behind it. That’s where the purpose of the Bitreserve and the Gold Bullion International partnership comes through: credibility.
“Bitreserve is on a mission to democratize the use of digital currency by protecting businesses and consumers from the risks inherent in the bitcoin model,” Treveor Clawson wrote for Forbes.
That theory is echoed by the piece written by Marcela De Vivo, on behalf of The Young Entrepreneur Council, who called the partnership a “unique move, considering how many global currencies have already abandoned the gold standard in recent decades.” He poses the question of why a consumer would use bitcoin as a currency when there are already e-wallet services accepted. But De Vivo defends the purpose of bitcoin, saying it’s more than just a currency.
“If Bitcoin hopes to attract enough users to make it viable in the mainstream marketplace, adopting the gold standard should help create an environment that attracts those outside the world of speculative investing,” he wrote. “If Bitcoin itself were currency, then there would be no reason to take those extra steps. However, Bitcoin is not a currency; it’s a platform. The true value of Bitcoin rests in its potential for innovation and equal opportunity in the global marketplace.”
When comparing bitcoins to the global remittance industry, the Forbes piece points out the cost difference to using bitcoin prices instead of companies like Western Union and MoneyGram, which charge customers more. As the article highlights, international remittance charge somewhere between 4-10 percent for a customer to send out and points out that “bank transfers can be equally costly. Depending on where the money is going, it can take several days or even weeks for a deposit to be collected and finalized.” But not with bitcoin. And that’s where it’s got its edge, the article suggests: “Bitcoin remittances. …cost 1-3 percent and the deposits are sent, collected and finalized in minutes.”
“Cutting out the middlemen will transform emerging global markets. Workers in these markets are burdened with global transaction fees that slow deliveries and cap collection. Conversely, bitcoin transactions make ordering from India just as simple and almost as fast as ordering from Canada,” De Vivo wrote.
While consumers and investors debate the value of investing in digital currencies like bitcoin, there’s always been an undeniable value in gold. Gold has and will always be deemed a precious metal and will, in some capacity, be valued as a mode of currency. Whether it be back in the days of the ancient Greece trading markets, or the cheesy modern-day commercials about investing in gold, there’s always been an audience for it. And in a recent interview, Savneet Singh, co-founder of Gold Bullion International discussed the future of gold in a digital currency world.
“Bitcoin has certainly increased the interest in gold — much of the intellectual pieces behind bitcoin have many parallels and analogs to gold, which has created a broader interest and awareness of the potential here,” he said. “Bitgold itself will aid in greater adoption of gold now that it allows for the spending and adoption of gold. But most importantly, bitgold makes gold easy to buy. The bitgold product will help the adoption of gold, but in the long run, it is hard to say what will happen; will everyone pursue bitcoin or gold, I’m not sure.”
Looking at how bitcoin — or bitgold, in this case — impacts the consumer economy, Singh said Bitreserve is aiming at making digital currencies more mainstream so consumers can see the value they hold in a global economy. Enabling consumers to be connected with the concept of bitcoin’s functionality is the first step toward wider-spread adoption in the industry, he says.
“The adoption of any cryptocurrency, whether it’s bitcoin, bitgold, ripple, etc. helps everybody — it creates more usability and accessibility to the broader population. What I think is exciting about bitgold and what Bitreserve is doing, is that it makes it very easy to use, and that has been a big struggle with other applications using the Blockchain and bitcoin. From a consumer perspective, it almost humanizes it as a usable form of payment,” Singh said.
And right now, when Bitcoin is under fire, maybe being “humanized” is just what the doctor ordered.
Bitcoin Tracker | Week 61
Larry Summers may be softening as Summers expressed his belief that new payments technologies will emerge. Xapo’s founder remains totally enamored, calling bitcoin the world’s greatest form of money ever – past, present and future. Yet, some have compared bitcoin’s future to pogs. (Which isn’t exactly a great thing.) and another exchange folded after someone allegedly ran off with all of the money (Hong Kong dollars, not bitcoin). And with prices hovering between $215.44 and 219.05 according to the PYMNTS.com Bitcoin Price index, some wonder if $200 is the new normal.
As always, if you have any news you’d like to share, please send it our way at contactus@pymnts.com.
On the Plus Side …
Summers, a former U.S. Treasury Secretary (and former Innovation Project speaker), has given a small nod to bitcoin, which is better than his previous skeptical comments. Summers supports the idea of removing the frictional costs and inefficiencies that exist in the global payments system.
On the Dark Side …
Remember pogs? Of course you don’t. It was a game that was the “next big thing” that really wasn’t. Anyway, it’s how some have characterized bitcoin’s future – the pogs of money! A big trading and investment bitcoin site based in Hong Kong has come out to be nothing more than a classic Ponzi scheme when almost $400 million of U.S. dollars went missing.
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