While economic conditions continue to be fluid in the world markets, a new digital monetary system promises to provide a cost-effective alternative for financial transactions to businesses of all shapes and sizes.
Bitcoin – with great wiggle room for future evolution – may not yet be a shoo-in in the commercial world, but it is certainly poised to emerge as a powerful parallel currency – the invisible currency.
To understand the trends in the Bitcoin currency market, RMN Digital invited Javier Marti, founder and managing director, Bitcoin Global Investments, for a discussion.
Here Javier expresses his views in an exclusive interview with Rakesh Raman, the managing editor of RMN Digital.
1. What is the need of introducing a parallel digital currency like Bitcoin?
Bitcoin is a worldwide currency, method of payment and store of value. Bitcoin is a kind of digital gold. In each of these areas, Bitcoin offers clear advantages over current alternatives. To name a few of its benefits, Bitcoin allows us to:
- Transfer money around the world easily, cheaply and at a very low cost
- Move money from one place to any other in the world, just by having access to a password
- Accept micro-payments in real time; that would be impossible to accept with current payment systems
On the geo-political side, mathematically speaking, the situation most of Western economies find themselves in is unsustainable.
Due to increasing deficits, corruption and bad management, some kind of financial collapse is likely to happen at some point. This financial collapse may happen gradually over time, or very suddenly, as the result of a particularly serious shock to the system.
This is what attracts those that invest in Bitcoin as a store of value. They are making the bet that Bitcoin will either continue increasing or decrease at slower pace than their national currency.
For these individuals allocating some of their funds or savings into Bitcoin, it can be the solution these investors need to protect their assets and lose as little money as possible when bank bail-ins, devaluations, capital controls and other economics shocks begin to happen.
There are also many other reasons why Bitcoin may succeed, that for the sake of brevity we cannot discuss in this short article.
Among them is the fact that 3.5 billion people in our planet have or may soon have access to the internet, but very limited access to convenient financial services. They are part of the global community, they are ready to buy and sell to the world, but until now they did not have a practical solution to do that. Now, with Bitcoin, they do.
2. While the Web is replete with warning messages that Bitcoin services are not regulated, is it safe to buy Bitcoins against your real-world currencies?
Like any other assets, extreme caution should be applied in anything related to any kind of investment.
Since the moment of its inception, Bitcoin has been a highly speculative investment. Although logic would tell us that Bitcoin has the potential to reach astronomical value per bitcoin unit in the near or long term, there is also a risk that this may take a long time, or that bitcoin remains at current or lower levels for a long time before being replaced by a superior entity that is widely and internationally adopted.
It is worth nothing, however, that every single day that bitcoin is in circulation, the chances of bitcoin itself being THE global currency and store of value of the near future increase exponentially.
Every day that bitcoin “is alive” more and more investors, individuals, businesses and technologists are learning about it and discovering that there are more practical, effective and cheaper alternatives to store and transfer value than the ones we use today.
Our advice to potential investors in Bitcoin is two-fold:
1) Try to understand the technology itself and its potential to change the financial and commercial world
2) Only invest in Bitcoin “as much as you can afford to lose,” if one of the many events that may devalue Bitcoin in the future comes to pass.
3. Is the global commercial world ready to accept Bitcoin or is it still a lack of trust in this currency that is becoming a hindrance in its acceptance?
According to many observers from the press, economists and financial “professionals”, Bitcoin “should have died” many times already.
However, Bitcoin today remains very much alive and its core principles and the technology at the foundation of the Bitcoin phenomena remain as sound, alive and effective as ever.
In most cases, the lack of trust on what Bitcoin is and what it represents stems from an incorrect or misinformed understanding of it.
Now, answering your specific question, is the world ready? The world clearly needs Bitcoin, but the current financial systems around the world, as possibly the Bitcoin network today, are not ready to withstand a very sudden increase in popularity in use. And this is one of the issues Bitcoin faces.
Since this technology has not reached its full potential yet, growing too fast can be worse than growing too slow, but I trust that as adoption increases, the technology will improve and expand to deal with it. This is how the Bitcoin community has been working for the past few years, and I see no reason why this would change in the near future.
4. What are the advantages of adopting Bitcoin currency system to businesses? And are there some specific segments of businesses that should embrace this system?
For businesses, some of the many benefits of Bitcoin include lower transactions costs, reduced fraud and charge back claims and for those businesses that move a lot of cash around – retail operations, banks, etc. – an important decrease in the cost of moving this money around.
Today, if I own a shop and all my clients were to pay in Bitcoin, there would be no need to send the money physically anywhere. This would reduce the need for security professionals, administrative professionals and others that are an expensive overhead for these businesses today.
Needless to say, more and more customers are choosing to pay with credit cards today. Bitcoin, however, removes the intermediary between the client and the business, facilitating and giving more flexibility to the general running of the business when it comes to payments.
5. If the Bitcoin currency tends to bypass the financial systems of various governments, why should they allow it to operate?
This is a very good question and one I have touched on my Bitcoin presentations. I think the artificial bureaucratic obstacles Bitcoin may have to overcome on its path to wider adoption are one of the most important things to evaluate when investing in Bitcoin.
Due to the nature of the Bitcoin technology, there is a risk of tax and capital evasion that governments will be increasingly concerned about, the more they understand the technology itself.
Would they “allow it to operate”? In the short term, most governments around the world have and may use their current tools to dramatically slow down Bitcoin adoption and understanding.
However, this will happen on a country by country basis – or as regional block regulations, such as the EU’s. Some countries will have a more open stance on Bitcoin, and thus allow its viral spread around the world, as they transact with other countries using it.
Eventually, the superior technology will succeed and take over those areas in which the efficiencies it can provide are translated into profits for businesses and corporations.
6. Reportedly some countries facing severe economic challenges are planning to do away with traditional currencies and completely adopt Bitcoin system. Is it possible?
As we speak, it is complicated and possible, but not very likely. Adopting a currency for a whole country is not a thing that can be easily done. Such a move has powerful economic and political implications that may prevent such an event from happening in the short term.
7. What is the role of Bitcoin Global Investments that you manage in the Bitcoin market?
We are pioneers in offering a range of Bitcoin consulting services, analysis, indices and general intelligence. We are a team of Bitcoin professionals around the world concetrated in obtaining, collating and interpreting Bitcoin information that allows our clients to make better financial and strategic decisions.
We also own a portfolio of powerful Bitcoin-related .com domain properties, including BitcoinPropertyInvestments.com, BitcoinLendingClub.com, BitcoinAutoInsurance.com and many others.
Through joint-ventures, lease options or freehold purchase, these domains give operators the chance to start their business and dominate their verticals with the advantage of owning a memorable and powerful company presence.
I personally enjoy giving presentations on Bitcoin technology and its future to businesses, universities and the press. Bitcoin does not have to be complicated to understand, if explained to audiences in the right way.
8. What is your advice to businesses and consumers who want to use Bitcoins?
Invest time understanding the technology and its possibilities before judging it, or investing in it. Moreover, be extremely conservative in your choice of partners and providers in the world of Bitcoin. One of the things we do is to protect our client’s funds through the provision of precise intelligence on who to trust and who should not be trusted.
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Javier Marti (pictured above) is Bitcoin Global Investments’ founder and managing director. He is a business consultant and entrepreneur with ample experience in three different business sectors in four countries. He is also the founder of the first and main Bitcoin meetup group for Bristol and the South West area of the UK.
An avid follower of future trends through more than 2000 posts on his blog Trendinews.com, Javier shares his insight in the areas of technology, psychology, and business with audiences around the world.
This interview is published under the RMN Digital’s “Thought Leaders” series in which top tech market leaders of the world express their views on different burning issues and market trends.