Western Union Chief Information Officer John “David” Thompson was interviewed by Coindesk this week and made some very revealing comments about Bitcoin, and its future in global monetary transfer.
Many know Western Union as the world’s largest personal monetary transfer corporation, founded way back in 1851. Operating in 220 countries worldwide, it generated almost $800M last year in net income, which is down over 20% from 2012 . I wonder why it is down over $200M all of the sudden?
John “David” Thompson first revealed that he is a Bitcoin miner, doing it for both personal and professional reasons, to see “if Western Union could potentially benefit from its implementation.” Even after he has personally invested in Bitcoin mining, he labeled it “a solution looking for a problem to solve.” We’ll get to that in a moment.
The most interesting commentary was about how Bitcoin could and should fit the current monetary transfer paradigm. Western Union’s CIO, John “David” Thompson said:
“Bitcoin as a technology, as a capability, doesn’t mitigate any of those concerns. It doesn’t offer anything of value in addition to that marketplace. You still have the regulatory issues; you still have the fraud prevention issues, the consumer protection issues in that marketplace. So, I don’t see a connection there to make that market better with bitcoin.”
Could I delve deeper into his mindset and quotations? Yes. Am I going to bother? No. I think we’ve heard enough from the Establishment. You get the idea. But there is one more salient quote that bears repeating:
“Bitcoin as a technology doesn’t solve any problems for us in the core of our business.”
Here’s the other side of this story, as there is always two sides. This David Thompson doesn’t get Bitcoin, even from the inside as a miner. Western Union has state, federal, and international regulations to adhere to. It is a privately held corporation, with stockholders, which leads to many of these regulations they should be subject to. What does that have to do with Bitcoin? Comparing the business model, and the regulatory obligations therein, of Western Union to the technology of Bitcoin is like comparing the post office to an email. Both send information from place to place, but one does it faster and cheaper, and one is in its death throws, destined for obsolescence within a decade.
Bitcoin is not here to help Western Union. It is here to replace Western Union. Kodak was the world’s largest camera company, started in 1888. by George Eastman. They had over 90% of all the photo film market in 1976. They started to see a drop in sales in the late 90’s, and by 2012, they were filing for bankruptcy. The largest camera producer now is Nokia, a cell phone company. Blockbuster Video, which had over 9000 brick-and-mortar stores worldwide in 2004, was sent into BK by NetFlix by 2010. No company is too big to fall, unless you are a large financial fiefdom in the United States.
Imagine how quickly a technology that is organic and non-incorporated can swallow Western Union or any other regulated corporation, just by its sheer agility and viral nature. Western Union is already down 20%. When you drop 20% in a year, you have some issues, and one of the biggest ones is Bitcoin.
Western Union and PayPal are the two companies most in danger of losing to Bitcoin by attrition. Paypal knows it, so they have chosen to join Bitcoin, rather than get run over like Blockbuster did. This may or may not save Paypal. Only time will tell. At least they recognized the threat and addressed it.
Western Union is really in the crosshairs, and it’s only a matter of time before people worldwide understand Bitcoin, and see sending $100 for .40 cents is much better than paying $15 for the right. Western Union used to have the remittances market all to itself. 160 years is one hell of a run. But things end, and charging the poorest people on earth a tax of up to 15% or more just to send money home to family should end, and end sooner rather than later. Western Union has had its fun exploiting the monetary transfer market, but not playtime’s over. It’s time for them to hit the road, Jack! Bitcoin will take it from here.
And regarding the issue of fraud, consumer protection, and regulatory issues, these are universal problems, regardless of currency or transfer method. Western Union knows damn well that all of the money they exchange for a huge profit isn’t used for legal endeavors. Who is protecting the consumers from Western Union’s fees? People who defraud others when a product or service is exchanged for currency never last long. They get exposed and move on. There will always be crime. People said the Internet was all about criminal information exchange, porn, and espionage. 1-5% of Western Union’s funds transferred are used for illegal purposes, just like the US Dollar, the postal service of any nation, and the Internet. Hiding behind “fraud” and “consumer protection” is a very desperate argument used by failing governments and obsolete businesses.
How does Western Union “add value” by taxing every transaction 10-15%? Having to provide identification, personal information that should be private, and involving a third party that nobody wants involved in a personal transaction? Why can’t sending money be as easy and inexpensive as sending an email? Who says the government can’t strong-arm Western Union into giving up personal information that was agreed to be protected by Western Union in the first place? Yahoo was coerced by the NSA to release information that should be protected, so who’s next? Suddenly “trusted third-parties” aren’t so trusted anymore. Maybe it’s time to eliminate that outmoded concept, and keep personal transactions personal, and not something to be screened and exploited by corporate interests? Cutting out the middleman has always added value to any private transaction since the dawn of time.
Bitcoin is here to follow the Internet’s growth model, not Western Union’s. One grows every day, and one loses 20% a year. Bitcoin is not a company, but a technology. Bitcoin is not here to be taxed, regulated, protected, leveraged, or governed. It is here to innovate, create, dominate and disrupt the status quo, just like the Internet. And also like the Internet has done to countless fax machines, newspapers, and telephone directories, Bitcoin is also here to put an end some obsolete concepts that need to head back to the 19th century, where they belong. Hi, Western Union.
Do you agree with Western Union’s premise? Can Bitcoin topple this giant outright? What will Western Union be in 10-15 years? Share above and comment below.
Images from Wikimedia Commons and Shutterstock.