Cloudmanic Labs

Just a month into 2014, we are in the age of instant. Communication is instant. Amazon is getting close to delivering products to our homes via drones. And in the not-too-distant future, homes will have 3D printers to instantly produce products. The waiting times for just about everything are decreasing daily with one big exception: money transfers. It drives me completely nuts that the fastest way to transfer money from an account at one bank to an account at another is to withdraw cash and physically carry it to the receiving bank. As a business person I have to do this almost weekly. Yes, transfers by wire and Automated Clearning House (ACH) are options, but wire transfers are expensive and time consuming to set up and ACH takes days, not hours. And the United States has been frustratingly slow to address the situation—other countries have had instant transfers for more than a decade.

Frankly, I have given up waiting. I need a banking system that is in real time. I need a way send and receive money instantly and globally. Bitcoin has been hyped as a speculative investment opportunity and a means of online money laundering, but the bigger story is the possible shift away from centralized, government-backed currencies to a global digital currency that allows for cheaper, faster, and easier movement of money around the world. To oversimplify, a bitcoin is nothing more than a unique serial number that is protected by the power of cryptography. When I make a purchase using bitcoin, I am transferring this unique serial number to the seller in exchange for a good or service—just like when I hand a dollar bill to someone, who accepts it as value. Bitcoin is essentially the dollar going paperless, but offering the same relative anonymity and freedom as cash.

Two characteristics are especially intriguing: the supply of bitcoins is limited and the system for producing and trading them is decentralized. The programmers who created bitcoin did so in a way that will allow only 21 million bitcoins to be produced, or “mined” in bitcoin-speak. And in this way bitcoin is very much like gold: the supply is finite. Additionally, bitcoin operates through an open, peer-to-peer network of computers around the world—meaning no single government or institution is in charge. There are no borders, and no one has too much power. Anyone can set up a computer to get and use bitcoins. Sorry, big banks. Sorry, Federal Reserve.

That said, digital currency is on the brink of mainstream acceptance—and, perhaps inevitably, regulation. The U.S. government has, for example, recently signaled willingness to accept bitcoin as a payment alternative. Ideologues decry the involvement of the very political authorities bitcoin was developed to circumvent and undermine, but others welcome the stability and legitimacy that come with government imprimatur. Whether or not the result will be a revolution of the global financial system that unleashes repressed economies or a frenzied crypto-currency boom and bust, as some predict, remains to be seen.

In any case, bitcoin is a cool idea whose time has come. Though digital currencies are relatively new, I believe they are the financial future. Today some employees are being paid in bitcoins instead of dollars. Others are paying their rent and purchasing goods and services with bitcoins. As digital currency becomes more widely accepted, we are moving closer to a more open, fair, and instant financial world. Digital currencies are certainly on my top 5 list of things I am most excited about for the future.