Bitcoin’s decentralized platform of distributed trust continues to gain the attention of astute observers of centralized payment systems. One benefit bitcoin provides in today’s global economy is being a global currency. Bret Swanson, writing in yesterday’s Chicago Tribune, claims bitcoin can alleviate the problems international travelers increasingly encounter when making payments in foreign countries.
Swanson, president of Entropy Economics, a technology economic research firm, and Entropy Capital, a venture capital firm, relates the difficulty he recently encountered when his teenage daughter needed to pay for things during a trip to France. A few days before the trip, he loaded prepaid Visa and American Express cards, only to realize in reading the fine print that they may not work in all countries. Since he had waited until a few days before the trip, there wasn’t enough time to get a bank-issued debit card. Fortunately, he was able to load money onto a friend’s debit card for his daughter to use. But one week after she began using it, an ATM in Paris “ate” the debit card.
“Our little story demonstrates that the global system of money and payments is not keeping up with the rest of the frictionless digital economy,” Swanson noted. He sees banks’ efforts to reduce payment card fraud and meet anti-money laundering laws as further complicating payment issues for regular people.
Bitcoin, he observed, offers a solution. Bitcoin does not depend on payment card networks, banks, and government monetary authorities. For these reasons, bitcoin has become a key remittance platform for developing countries.
Swanson recognizes that bitcoin has some limitations: it is not yet accepted by a lot of merchants, and it is not “frictionless in its interaction with the rest of the economy.” Bitcoin’s price volatility is also a concern, although many believe this will decline over time.
“Regardless, bitcoin (and blockchain technology more generally) has solved some fundamental problems of information in a decentralized, complex world. And it highlights some of the unneeded and frustrating obstacles of our current monetary and financial platforms.”
As a decentralized platform of distributed trust, bitcoin has the potential to alleviate many of these headaches of our more-centralized payment system, which is based on banks, payment networks, and national laws and regulations.
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