Bitcoin: Fad or The Future of Currency?

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In today's payment technology marketplace, Bitcoin is still considered a newcomer in the early stages of adoption. While it is garnering a lot of attention, the emerging payment option is often overshadowed by the fear of the unknown and the discussions around its future can be polarizing. Some companies are starting to embrace it and show traction, while others are publically stating that they will not support it, for now. This session will explore the virtual currency landscape and the impact of Bitcoin, why it is stealing the spotlight and the challenges associated with adoption and regulation.

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Bitcoin: Fad or The Future of Currency?

  1. 1. Bitcoin Fad or The Future of Currency?
  2. 2. Latest Headlines Counterterrorism Program Names Virtual Currencies As Area Of Interest China Construction Bank shuts down bitcoin, litecoin transactions State regulators issue virtual currency warning Bank of Canada unconcerned about growing popularity of bitcoin Wisconsin State Assembly Candidate Accepts Bitcoin Contributions Wisconsin Government Accountability Board Forces Candidate To Return Bitcoin Donation New York casino offers latest virtual currency site MasterCard is paying lobbyists to concentrate on Bitcoin and mobile payments. Buying Beer With Bitcoin is Legal in California Ohio Bans Buying Booze With Bitcoin
  3. 3. 2014TeslaModelS 91.4Bitcoins($103,000) December 12, 2013
  4. 4. 2014LamborghiniGallardoLP560-4 216.843Bitcoins($209,995) December 13, 2013
  5. 5. Twobedroomapartment,Olso,Norway 5,600Bitcoins($680,000) October 29, 2013
  6. 6. NASCARSponsorship 67,000,000Dogecoin($55,000) March 25, 2014
  7. 7. 10,000 Bitcoins ($25) May 22, 2010 “I'll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day. I just think it would be interesting if I could say that I paid for a pizza in bitcoins ”
  8. 8. James Gagliardi James Gagliardi is Vice President of Product and Innovation at Digital River. He is responsible for the strategy behind the company’s global product roadmap and ensuring its suite of cloud commerce products and solutions meet, exceed and anticipate the needs of Digital River’s world-renowned clients. Views and opinions expressed here are my own. http://jamesgagliardi.com @jamesgagliardi 1LC2QvM8zrhtD57ewygsRnJZK65nCE3DuG
  9. 9. Digital River http://www.digitalriver.com WORLDWIDE COMMERCE WORLDWIDE PAYMENTS WORLDWIDE MARKETING
  10. 10. OUR CUSTOMERS INCLUDE TOP GLOBAL BRANDS $390M in 2013 revenue $30B annual online transactions (ttm) 20 years of experience 31 offices around the world 1,300+ commerce experts 243 serving countries and territories 200 payment methods Digital River http://www.digitalriver.com
  11. 11. Virtual Currencies
  12. 12. Virtual Currencies “An unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community”- European Central Bank “A medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency” - US Department of Treasury http://en.wikipedia.org/wiki/Virtual_currency
  13. 13. Virtual Currencies GOA Virtual Currency U.S. Dollars Real Goods & Services Virtual Goods & Services Closed Flow Virtual Currency U.S. Dollars Real Goods & Services Virtual Goods & Services Hybrid Virtual Currency U.S. Dollars Real Goods & Services Virtual Goods & Services Open Flow
  14. 14. Closed System Super Mario Bros. 100 coins gives Mario an extra life
  15. 15. Semi-Closed System
  16. 16. HybridSystem Chuck E. Cheese’s Tokens and Tickets
  17. 17. HybridSystem Chuck E. Cheese’s Tokens and Tickets
  18. 18. Hybrid/OpenSystem Delta SkyMiles
  19. 19. Open System Second Life – Linden Dollar
  20. 20. Abandoned Currencies
  21. 21. Microsoft Points Microsoft Points Users' existing Microsoft Points will be converted into a currency amount equal to or greater than their current Points balance.
  22. 22. FacebookCredits
  23. 23. CanadianDigital Currency Mint Chip
  24. 24. Failed and Abandoned Virtual Currencies Flooz (1999-2001) Beenz (1998-2001) E-Gold (1996-2009) InternetCash (1999-2001) DigiCash (1990-1998) CyberCash (1994-2001) Microsoft Points (2006-2013) Facebook Credits (2009-2012) Canadian MintChip (2012-2014)
  25. 25. Bitcoin
  26. 26. Decentralized Virtual Currency Bitcoin is a peer-to-peer payment system that is not controlled by one central authority. Cryptocurrency coins are "mined" with computers by solving complex mathematical equations called "hashes".
  27. 27. Bitcoin 2008: Bitcoin.org registered 2008: Satoshi Nakamoto published Bitcoin: A Peer-to-Peer Electronic Cash System that describes everything you need to know about Bitcoin 2009: Open Source Software Launched 2010: Mt.Gox, Bitcoin exchange was established 2010: Silk Road Launched 2011: Wikileaks started accepting BTC donation 2011: EFF Stops accepting Bitcoin 2011: First Bitcoin conference 2012: Wordpress accepts Bitcoin 2013: First Bitcoin ATM unveiled 2014: Overstock.com begins accepting Bitcoin, $124,000 in sales on first day. 2014: Mt.Gox, loses 800,000 bitcoin http://historyofbitcoin.org/
  28. 28. Bitcoin vs. bitcoinsSystem, protocol, community currency
  29. 29. Bitcoin Currency BTC/XBT 1 bitcoin= 1 BTC 1 cBTC = 0.01 BTC 1 mBTC = 0.001 BTC 1 μBTC = 0.000001 BTC 1 satoshi= 0.00000001 BTC $4.00 = 0.009324 BTC $4.00 = 9324.00 Bits (μBTC) Dominican Joe Coffee Shop
  30. 30. BitcoinCurrency Exchange Rate
  31. 31. Commodity Bitcoin is actually a commodity with its own fluctuating value, like a stock or bond. The proper way to think about Bitcoin for now is not as a currency, due to its lack of price- stability, but rather as a commodity - Salil Deshpande, Managing Director at Bain Venture Capital Scarcity helps drive up the price of a commodity. Food prices rise when a drought chokes off supplies, for example, and bitcoin has its scarcity built in. Bitcoin has been classified as a commodity in Finland after the Scandinavian country’s central bank declared that it did not meet the definition of a currency.
  32. 32. Bitcoin System WalletMining Transferring Blockchain
  33. 33. MiningMiners bring new Bitcoins into the circulation through a complex mathematical and computing process. The total number of Bitcoin is capped at 21 million BTC.
  34. 34. Wallet 1LC2QvM8zrhtD57ewygsRnJZK65nCE3DuG Wallets are computer files that hold bitcoins. Similar to how emails are sent between email addresses, bitcoins are sent between wallets. Each wallet has a unique address that distinguishes it from other wallets. If you lose the address, that Bitcoin is lost to you forever.
  35. 35. Transfer Email or Bitcoin Address
  36. 36. Transfer QR Codes
  37. 37. Blockchain The blockchain stores a public leger of every transaction made. It is used to verify transactions and prevent fraud and double- spending, making Bitcoin secure. Bitcoin transactions are generally irreversible, and users could lose their principal if they hold onto bitcoins for an extended period of time.
  38. 38. How to buy Bitcoin Bitcoin ATM In-PersonOnline Exchange
  39. 39. In-Person
  40. 40. Bitcoin ATM
  41. 41. Bitcoin ATM Authentication Requirements Email Face Palm Print Government ID
  42. 42. BitcoinOnline Exchange Mt.Gox
  43. 43. Bitcoin Exchange
  44. 44. Buying Bitcoin Verification Method
  45. 45. Buying Bitcoin Verification Method
  46. 46. Buying Bitcoin Link A Bank Account
  47. 47. Buying Bitcoin Verification Method
  48. 48. Buying Bitcoin Verification Method
  49. 49. Silk Road
  50. 50. Using Bitcoin
  51. 51. Vending Machine Marijuana vending machine accepts Bitcoin
  52. 52. Paying with Bitcoin
  53. 53. Paying with Bitcoin Notable Brands
  54. 54. Paying with Bitcoin Overstock.com
  55. 55. Yelp Adds Bitcoin
  56. 56. Bitcoin Debit Card Xapo debit card
  57. 57. Alternatives
  58. 58. Cryptocurrency Name Market Cap Price 1 Bitcoin $5,511,150,639 $432.88 2 Litecoin $286,348,565 $10.19 3 Peercoin $43,851,072 $2.05 4 Ripple $39,426,230 $ 0.005202 5 Dogecoin $34,645,538 $0.000455 6 Nxt $22,512,348 $0.022512 7 Namecoin $17,674,551 $2.04 8 Mastercoin $17,587,609 $31.23 9 BlackCoin $9,271,423 $0.12 10 DarkCoin $7,037,259 $1.67
  59. 59. CreditCard
  60. 60. PayPal
  61. 61. Amazon
  62. 62. Apple
  63. 63. Google
  64. 64. Facebook
  65. 65. Carrier Billing
  66. 66. Wire Transfer
  67. 67. Bitcoin ADVANTAGES Low transaction fees Fewer risks for merchants Security and control No Risk of “Charge-backs” Global DISADVANTAGES Consumer onboarding difficulty Wallets Can Be Lost No Buyer Protection Volatility Regulation uncertainty Bitcoin is property, subject to capital gains
  68. 68. Sound Off Questions, Comments, Thoughts
  69. 69. References Bitcoin http://bitcoin.org TryBTC http://trybtc.com Coindesk http://www.coindesk.com History of Bitcoin http://historyofbitcoin.org/ BitLegal http://www.bitlegal.io/ United States Government Accountability Office http://www.gao.gov/assets/660/654620.pdf Internal Revenue Service http://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency- Guidance Financial Crimes Enforcement Network http://www.fincen.gov/news_room/testimony/pdf/2013 1119.pdf
  70. 70. Bitcoin Fad or The Future of Currency?

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