?¡ãAt some point, I had an ??aha!?¡¥ moment and realized that Bitcoin was best understood as a new software protocol through which you could rebuild the payments industry in ways that are better and cheaper,?¡À Chris Dixon, a partner at Menlo Park, California-based venture capital firm Andreessen Horowitz, wrote in a blog post.
Bitcoin enthusiasts say they are building a system to move money across the Internet securely and at a lower cost than existing wire transfers, bank debits or remittances. If they can eliminate the friction created by middlemen and create easy-to-use consumer tools, Bitcoin businesses may claim a piece of the revenue and still deliver lower costs.
?Already, some retailers are paying 1 percent to process transactions in Bitcoin, improving profit margins. Taking debit or credit cards, they may pay more than 3 percent to issuing banks. Bitcoin transactions log immediately, and are confirmed in as little as five minutes.
Despite a considerable amount of competition between banks, the reality is that fees for money transfers are unusually high and the speed with which they are completed leaves a great deal to be desired. Bitcoin and other potential crypto- currency exchange mechanisms represent a developing technology base from which consumers and corporations are likely to benefit over the long term.
Since this is a technology very much in its developmental stages, where no one company could be described as dominant, there is nothing stopping some of the major transactions companies from entering the market and offering their own interpretation of how it can be best implemented.
?An additional consideration is that, so far, Bitcoin represents a transfer mechanism rather than a credit transaction. This suggests it is likely to be some time before it represents a threat to credit card companies.Back to top