{"id":201,"date":"2014-07-01T07:55:00","date_gmt":"2014-07-01T07:55:00","guid":{"rendered":"http:\/\/blog.holytransaction.com\/media-distracting-from-bitcoin-potentia\/"},"modified":"2021-10-03T17:10:41","modified_gmt":"2021-10-03T15:10:41","slug":"media-distracting-from-bitcoin-potential","status":"publish","type":"post","link":"https:\/\/holytransaction.com\/blog\/2014\/07\/media-distracting-from-bitcoin-potential.html","title":{"rendered":"Deloitte: media \u2018distracting\u2019 from Bitcoin\u2019s disruptive potential"},"content":{"rendered":"
A new report by Deloitte University Press\u00a0says\u00a0bitcoin has great\u00a0potential to disrupt\u00a0payments and other industries, but that\u00a0the media may be\u00a0\u201cdistracting\u201d governments and businesses\u00a0from the technology\u2019s advantages.<\/b><\/div>\n

(CoinDesk<\/a>) The\u00a0report<\/a>, titled \u2018Bitcoin: Fact. Fiction. Future.\u2019 and authored by Tiffany Wan and Max Hoblitzell, points out that the media tends to focus on bitcoin\u2019s volatility<\/a>, government crackdowns<\/a> and exchange meltdowns<\/a>\u00a0instead of\u00a0\u201cits potential long-term significance as a disruptive new money technology<\/em>\u201d. In addition, Deloitte UP\u00a0sees potential for bitcoin<\/a> in fields that\u00a0are often overlooked even by proponents of the digital currency:<\/p>\n

\n

\u201cBitcoin is more than just a new way to make purchases. <\/em>It is a protocol for exchanging value over the Internet without an <\/em>intermediary. Much has been written about the payment applications of <\/em>bitcoin, including remittances, micropayments, and donations. However, <\/em>bitcoin could soon disrupt other systems that rely on intermediaries, <\/em>including transfer of property, execution of contracts, and identity <\/em>management.<\/em>\u201d<\/p><\/blockquote>\n<\/div>\n

Bitcoin evolution and new use cases<\/h2>\n
The report\u00a0argues that new use cases will emerge as bitcoin continues to evolve, opening up a new range of opportunities, along with new challenges for governments and businesses. Bitcoin, it says, has the potential to change the way governments regulate the market and enforce the law, while companies\u00a0could continue to innovate and eventually change the way we conduct business and think about work.<\/div>\n
<\/div>\n
\u201cThe sooner the public and private sectors understand the potential of this new technology, the better prepared they will be to mitigate its challenges and realise the benefits of bitcoin and other similar virtual currencies,<\/em>\u201d the authors concluded.<\/div>\n
<\/div>\n
In the report, Deloitte\u00a0UP\u00a0explains how bitcoin<\/a>, via\u00a0cryptography, is used to create an open but securely authenticated
\nsystem, and why it has to deal with less overhead than the traditional payments system.<\/div>\n
<\/div>\n
However, in addition to this general optimism, a number of fairly serious challenges facing bitcoin are also mentioned.<\/div>\n

Speculation and\u00a0regulation<\/h2>\n
Deloitte\u00a0UP\u00a0lists volatility, regulatory uncertainty, exchange security, transaction volume and ease of use as its biggest bitcoin
\ncaveats. Speculators rank high on the list, adding to the volatility and creating the impression of a get-rich-quick scheme. Thus, they introduce more reluctance on the part of everyday investors. The regulatory environment still leaves much to be desired. Like speculation, regulatory moves have a big impact on the price, creating even more volatility.<\/div>\n
<\/div>\n
\u201cAs governments begin to issue consistent guidance on bitcoin, businesses may become more willing to accept it as a form of payment<\/em>,\u201d the report\u00a0says.<\/div>\n
<\/div>\n
Security and ease of use are both\u00a0seen\u00a0as stumbling blocks for the emerging technology, and the authors\u00a0clearly state that the system needs to be vastly improved to make bitcoin truly practical for the average consumer.<\/div>\n
<\/div>\n
The conclusion is simple: mainstream users are unlikely to use bitcoin until wallet services\u00a0<\/a>develop more user-friendly<\/a> and secure storage techniques. Cold (offline) storage does little to\u00a0encourage users\u00a0and,\u00a0furthermore,\u00a0goes against the basic principle behind digital currencies.<\/div>\n
<\/div>\n
Another factor weighing down bitcoin is the relatively low transaction volume of about 60,000 transactions per day, which pales in comparison to Visa\u2019s 150 million daily transactions. The bitcoin network would have to evolve and grow to accommodate mainstream transaction volumes, raising questions about bandwidth, storage and power efficiency.<\/div>\n

More than money<\/h2>\n
However, unlike Visa and other credit card companies, the bitcoin block chain can be used for a range of different purposes.<\/div>\n
<\/div>\n
Deloitte UP examines bitcoin as a payments system\u00a0and\u00a0as a way of transferring value across the globe at much lower fees than traditional systems. Bitcoin could thus disrupt the remittance market<\/a>, valued at $514bn in 2012, according to the report.<\/div>\n
<\/div>\n
This excerpt\u00a0neatly sums up bitcoin\u2019s benefits in payments:<\/div>\n
\n

\u201cToday, if someone buys a donut with a credit card, the merchant pays an interchange fee to the credit card issuer. This interchange fee is usually a small flat amount (10-20 cents) plus a percentage of 1-3 percent. For a low-margin good like a donut, a 10- to 20-cent flat fee can approach 100 percent of the cost of goods. This interchange fee is often passed on to the customer. Using bitcoin, the transaction fee could be lowered to as little as 1 percent. This could ultimately evolve into a new payment system for credit card companies and banks.<\/em>\u201d<\/p><\/blockquote>\n<\/div>\n

New use cases<\/h2>\n
In addition to remittances and payments, the authors\u00a0say the bitcoin protocol could be used to simplify complex asset transfers, ranging from cars to securities. Using a frictionless system to transfer assets, backed by a public ledger, could eliminate the need for brokers, lawyers, notaries and similar services. Bitcoin could also be used for identity management and execution of
\nvarious contracts. Using the bitcoin protocol to manage identities would practically eliminate the possibility of forging identification\u00a0documents and it would help put confidence artists out of work. A network operated by the government, a contractor or any other entity could verify anyone\u2019s identity simply by scanning a bitcoin key.<\/div>\n
<\/div>\n
\u201cThis system, based on cryptography instead of paper documents, would simultaneously increase mobility and security. If bitcoin can be used for travel documents, it could also be used for other forms of identity management like social security numbers, tax identification numbers, or even driver\u2019s licenses,<\/em>\u201d says the report.<\/div>\n
<\/div>\n
Another offshoot of the idea is the use of block chain technology to create and execute contracts. Traditional contracts could be replaced by digital contracts, essentially lines of code that self-execute when a triggering event occurs.<\/div>\n
<\/div>\n
This could pave the way to new financial instruments, reduce legal fees, introduce more transparency into the financial industry and eliminate some\u00a0of the\u00a0paperwork that in practically every industry.<\/div>\n
<\/div>\n
Vitalik Buterin\u2019s Ethereum<\/a> is mentioned as a new venture that combines registry and escrow functionality to execute the conditions of a contract automatically.<\/div>\n
<\/div>\n
As for the future of bitcoin, Deloitte UP does not offer a clear conclusion. It outlines four possible scenarios<\/a>, but indicates there are simply too many factors at\u00a0play to pick any\u00a0one of them.<\/div>\n

About the\u00a0publisher<\/h2>\n
Deloitte University Press \u2013 an imprint of Deloitte Development LLC\u00a0\u2013 publishes original articles, reports and periodicals that aim to provide insights for businesses, the public sector and NGOs. It draws upon research and experience from throughout the\u00a0Deloitte\u00a0professional services organisation, and from\u00a0co-authors in academia and business.<\/div>\n
Newspapers<\/a> image via Shutterstock<\/i><\/div>\n

Open your free digital wallet here<\/a> to store your cryptocurrencies in a safe place.<\/p>\n","protected":false},"excerpt":{"rendered":"

A new report by Deloitte University Press\u00a0says\u00a0bitcoin has great\u00a0potential to disrupt\u00a0payments and other industries, but that\u00a0the media may be\u00a0\u201cdistracting\u201d governments and businesses\u00a0from the technology\u2019s advantages. (CoinDesk) The\u00a0report, titled \u2018Bitcoin: Fact. Fiction. Future.\u2019 and authored by Tiffany Wan and Max Hoblitzell, points out that the media tends to focus on bitcoin\u2019s volatility, government crackdowns and exchange […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,37,76],"tags":[704,764],"yoast_head":"\nDeloitte: media \u2018distracting\u2019 from Bitcoin\u2019s disruptive potential -<\/title>\n<meta name=\"description\" content=\"Bitcoin is more than just a new way to make purchases. 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