Carl Mullan is DGC’s founder, former editor and publisher of DGCMagazine with more than 50 past issues online. His new book, The Digital Currency Challenge – Shaping Online Payment Systems through US Financial Regulations, is now available on Amazon.
Bitcoin is fast, secure, nearly free, has a stable supply and has a high level of user control… its just plain better than the banks. You have to wonder why the hell everyone isn’t using it? But the Bitcoin economy is still fragmented and dependent on payment processors and exchangers.
Merchants accept bitcoin only to convert it back into their local fiat currency, and who can blame them? There just aren’t enough bitcoin accepting businesses out there and they have suppliers and landlords to pay. But bitcoin was meant to be a peer-to-peer currency, not a peer to exchanger to bank to bank to exchanger to peer currency.
Crypto will win the currency wars, but it may be a while before it reaches your home town. Bitcoin is better, but change is hard.
It’s a business platform, a digital commodity market, a business game and an autonomous economy that may just work its way into the ‘real’ world. Seventh Continent is a 3D virtual world where you can set up and run a business for real profit in Bitcoin or fiat.
“The idea is to offer a new ‘continent’, the ‘Seventh Continent’, to the Bitcoin community where Bitcoin users can do fair and corruption free business,” explains CEO Gregory Harmati. The Seventh Continent is an “independent, free market restricted only by supply and demand”. It aims to create an economy based on freedom, transparency and fair play.
Exchanges are the link between the old world of banking and the new world of crypto-currencies; they play a vital role in supporting the growing Bitcoin economy. If Bitcoin hopes to continue rapidly gaining new users it needs this bridge between the old and new systems to be up and functioning. While Bitcoin is in no way dependant on a link to the traditional banking system, its smooth transition into mainstream use certainly is.
Unfortunately these bridges which make up the exchange market are concentrated and often broken. This leads to concerns over reliability and security, which can cause market panic and extreme volatility. As Bitcoin enters the mainstream a wave of new businesses, services and software developers have recently dedicated their efforts to solving this problem. Their task will not be easy, and the while the exchange rate has seen some recent stability, there is a long way to go before obtaining bitcoins can be called user friendly and reliable.
One of the biggest problems currently facing the Bitcoin economy is the exchange market. The market suffers from continued concentration and price volatility. In order to maintain their links to the traditional banking world, these businesses have the unenviable task of attempting to shove Bitcoin into the world of bank accounts and anti-money laundering policies. New exchanges are joining the Bitcoin economy but regulatory compliance is no small barrier to entry. The few existing online exchange services continue to be significant points of failure for the Bitcoin economy.
A network of small, peer-to-peer transactions would likely bypass many of these issues and would be a fitting solution for the brilliantly decentralized Bitcoin network. But is such a thing possible? The guys behind MetaLair, a UK based start-up, think so and are working hard to develop the software and find the investors to make it a reality.
After the success of services such as M-Pesa, Kenya’s mobile-phone based money transfer service, it is clear that there is a large under banked population in the non-western world. A population that is quick to adopt low cost mobile based solutions.
A new mobile payment system, Dinero MPS, aims to offer a wide variety of mobile payment services starting with the unserved markets in Africa, South America and Asia. Founded by financial cryptographer Ian Grigg and entrepreneur Ken Griffith, Dinero’s Ricardian-Contract based system is set to launch later this year with the release of an Android phone app.
Dinero’s co-founder Ken Griffith shared with DGC insight on the businesses’ plans and motivations.
Part II examines the Voucher-Safe economy, trust, security and software.
This final part looks at Voucher-Safe’s interaction with Bitcoin, Issuers and OnionPay.
In this part we examine the Voucher-Safe economy, trust, security and software.
The business’ founders, Chris Odom (Fellow Traveler) and Johann Gevers aim to make this ‘financial system 2.0’ possible by developing commercial versions of the Open Transactions digital finance library. This software will allow digital finance entrepreneurs to startup micropayment services, financial markets, community currencies, escrow services, and many others all without depending on the traditional banking or legal system.
Johann, Monetas’ CEO, recently shared with me his thoughts on finance, his belief in decentralized systems and his plans for Monetas.
Digital Gold Currency is a fantastic idea. Gold enjoys thousands of years of history as an excellent currency and store of value. It is a form of money that is constantly chosen by the market and that needs no legislation to support its value. Gold is stable, solid and cannot be pulled out of thin air. With modern technology gold can be used as a currency online without any more effort than it takes to check your email. Brilliant!
But as DGC’s were starting to take off and be recognized for their many benefits, the rug was pulled out from under the industry with the prosecution of e-gold. The old DGC business model is centralized and vulnerable to seizure, censorship and prohibitive regulation.
The Voucher-Safe system allows for a more decentralized, Anti-Money Laundering compliant way to anonymously exchange value. It’s DGC 2.0, a more flexible and resilient system where anything can be money. “The idea behind voucher-safe is that it isn’t about making just one thing money. Money can be gold, it can be existing national fiat currencies, it can be bitcoins, it can be silver, it can be anything of value that people want to exchange.”