SXSX Blog: Bitcoin's impact on consumers and businesses
Blogging for Newsline from SXSW 2014 in Austin, Texas, founder of Maido and Mindshare UK partner, George Wiscombe, explains why Bitcoin is generating so much buzz at this year's festival - and what it could mean for the connected consumer of the future.
Sitting here at South By South West 2014 in Austin, Texas, it's easy to forget just how much the online world has changed.
Back in the mists of internet prehistory, life was way harder. In the early 90s, to register a domain name you needed to telephone someone (yes, hard to believe). There were big beasts - telecommunication companies - that had massive, stable infrastructure in place that handled all of our communications. But at ground level, only the more advanced individuals - let's call them Homo Nerdicus - used emails.
But both sending and receiving were not straightforward, so any early electronic missive was likely to go AWOL. In the early '90s, for ordinary folk, communicating on the Internet was inaccessible, difficult and messy.
Let's fast forward to today. In the blink of History's eye, the entire landscape has been transformed. As the Internet was standardised and stabilised it was suddenly a platform that enabled us to communicate for considerably less cost to many more people.
If you're operating a low margin business on the Internet, accepting Bitcoin could potentially double your profit margins.
The belief at SXSW is that this transformation in technology is being echoed by the technology behind Bitcoin. For the first time we have the ability to actually transfer ownership of a digital 'file' from one person to another without the need for a third party.
Credit cards were invented for the real world. Their role as e-commerce, after several false starts, evolved later. One of the most important step-changes was PayPal. This massive leap took Internet commerce into the modern world. That said, there is still "friction" there, rooted in real-world practices and conventions: you still have to give over personal details, emails, passwords and credit card information to make a payment.
Bitcoin is native to the Internet, and cuts a lot of this real-world friction out. Bitcoin doesn't require payment details - it's possible to send money with just your digital signature.
Bitcoin has evolved cash; making it truly digital cash for the Internet age.
But that doesn't mean this evolution has been simple and straightforward. Bitcoin's challenges have been well-documented.
The digital currency has been plagued with bad tech press after several Bitcoin-banks have been hacked (MTGOX alone lost $470 million+ in Bitcoins). So, it's good sitting here in Austin to see the SXSW community still so enthused about it.
One reason the collective assembled here are so excited is because of what Bitcoin makes possible. In practical terms we are talking about reducing overhead fees that payment processers are currently adding to transactions. If you're operating a low margin business on the Internet, accepting Bitcoin could potentially double your profit margins. That's good news for everyone.
The advocates at SXSW think we're only a year away from a major retailer - in the US at least - accepting Bitcoin in store. Being wary of digital evangelists' false dawns before, it's wise to remain cautious of such optimism, but that said, whether it is Bitcoin or another new challenger, over the coming years the technology and thinking that's behind the currency will disrupt the financial sector and change the way we trade online forever.
When we arrive there, the way we trade today will look as prehistoric as the pre-internet age looks to us today.