Bitcoin to enter through the back-door

   An interesting trend is observed in the area of virtual currencies – the technology staying behind them is becoming more and more attractive for the regular banks. Along with the attempt of governments to repress the competitor of the fiat-money, goes a natural process of partial implementation of virtual currencies philosophy.

   It is not clear what the fate of the Bitcoin itself will be. My own prognosis is that it will be crushed down as value after a global attack of major central banks (that already started), but after that will be stabilized and used first by the crime groups and underground economy. After that it will become a universal value measure. Anyway there are other prognoses, including the one of Warren Buffet that Bitcoin will most probably vanish in 10-20 years.
   Never the less of prognoses, it is clear that the idea and the technology behind Bitcoin contains much wisdom and logic, and itself will become a part of global finances. Bitcoin is not only a currency that has limited issuance. It is also a currency that offers very low transaction costs and also – a high level of secrecy. These are qualities that are attractive for using with any other currency. There is no reason not to exist blockchains and the same infrastructure with dollars or euros for instance.
   At current moment banks have serious transaction costs even between them. A single international wire transfer costs $20-30. At the same time a transfer of Bitcoins from USA to EU costs $0. SWIFT bank transfer can take days to get from sender to receiver. Bitcoin transfer takes 10 minutes, and there are alternative crypto currencies with even faster move.
   So why not use the same transfer and clearing model with fiat-money?
   In a competitive market any way of reducing costs is being implemented sooner or later. But this de facto means that Bitcoin will be legalized in a step by step procedure. Because as a similar infrastructure is created and similar ways of doing the job is implemented, it will lead to the next steps. This is a form of creating a suitable environment for growing a new organism.
   The situation looks like the creation of Internet. The major change is the change in philosophy – switching data packets instead of data channels. Although this idea was created with different purpose it has become a good base for the birth of the global Net.
Internet itself makes much governments feel uncomfortable and they are trying to limit and control it. But The Net is a fact, it exists and governments must conform to it. With Bitcoin technology always present, the expected future is similar…

Dobri B.
May-8th-2014

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