As finance experts, ex-bankers, and part-time CFO's for Canadian small businesses, we're watching closely the "Bitcoin phenomenon", whether it has a role to play for our clients, if so, when, and if not, why not.
It concerns us that even some members of our profession are starting to adopt the concept by accepting bitcoin as payments for services.
Don't get me wrong, we're all for new ways of doing things however, new currency? I don't think so. Too much history, and unlike the music business, where Napster and BitTorrent paved the way to new things, our world's currencies have already embraced digital, and, in my opinion not in need of any revolutionary overhaul, maybe some tweaking is all.
Much smarter people than any of us at InHouseCFO also have thoughts which we agree with.
Quartz Daily Brief - November 27, 2013:
The writers at Quartz, through their "Daily Brief" publication to which we subscribe, wrote today:
"There is small poetry in the fact that this week, when bitcoin burst through the $1,000 mark after quintupling in a month—proving beyond reasonable doubt that it is a bubble—the Netherlands, home of the very first bubble, had its debt downgraded.
Adrian Chen, a journalist who played a small and inadvertent part in kickstarting the bitcoin bubble two years ago, has blamed the media for blowing ever more air into it: “Tech blogs breathlessly track the price of bitcoin. Each new business that accepts bitcoin is heralded with the fanfare of a despot opening his country’s borders to a new, previously outlawed luxury.” In fact, notes economist Tyler Cowen, the past month’s explosion may have more to do with its growing use by wealthy Chinese to circumvent China’s strict capital controls. And if China’s getting in on it, speculators elsewhere are bound to conclude that the price of bitcoin can only keep rising.
When will the music stop? And more interestingly, how many more times will it start again? The ”second great bitcoin crash” has already happened, a fall from around $270 to $60 in April. Today that seems like small change. Will the third crash be the last? Dutch tulips are still bought and sold nearly four centuries after the tulip bubble, but will anyone be trading bitcoin a year from now?
In a wider sense, though, none of these questions matters. Bitcoin is to digital currencies as Napster was to music, argues The Economist—an experiment whose ultimate failure will pave the way for others to transform the industry. For now, suggests Chen, bitcoin is most interesting as a parable of human greed—and the crash, when it comes, “is going to be great.” Unless, of course, you’re holding a lot of bitcoin yourself.—Gideon Lichfield"
If anyone has a handle on currencies, these guys will.
As always they have an excellent take on Bitcoin in their article "Bitcoin under Pressure".
BitCoin as Protocol
The best way to look at the role Bitcoin may play in the annals of history, is very well laid out (and discussed ad-nauseum) in a posting by Union Square Ventures "Bitcoin as Protocol". A long list of obviously very technical talent attached to this posting gives me comfort that like mp3, BitTorrent and such like, it, at best will add functionality to currencies already in existence, not become a currency itself. At least not one our clients should be thinking about.
All in all, we see Bitcoin as entertaining news, and something I'm sure the banks around the world are watching closely, but not something our clients should be considering as new ways to increase their income.
The good old dollar is here to stay, maybe Bitcoin will cause enhancements to the current systems that will make all of our lives better. The current feature that ING Direct introduced regarding cheque deposits is mall but a good example. It didn't take long for CIBC to snap this up.