Tuesday, April 16, 2013

Insanly Astonishing Article: Bitcoin And The Future Of Money in a New World?

The following guest post is by Alex Ferrara, partner in Bessemer’s New York office where he focuses on investments in the software and Internet sectors.

As Bitcoin tops the charts as the hot new tech phenomenon, there has been chatter of whether or not it will succeed as a mainstream currency, missing a more important point. Bitcoin is already a success, offering great potential beyond providing a new store of value or currency. What is perhaps more exciting about this relatively new innovation is the growth of the underlying network of participants, and the economic incentives that are promoting its growth. Roughly 30 plus years after the birth of the Internet, we may be starting to see an important new technology layer emerge that is designed specifically to enable secure online transactions. Disclosure: Bessemer is not currently invested in Bitcoin or any companies in the space, but always has an eye on what is hot in tech.

Signs of a Tipping Point

Opponents of Bitcoin claim that this virtual currency allows for exchanges made in the dark corners of the Internet where anonymous buyers can purchase any number of illicit items from anonymous sellers. While there might have been issues with illegal activities in the early days of Bitcoin, the market has changed dramatically in the past several months. For example Bitpay, a company that enables legitimate merchants to accept bitcoin as a form of payment now serves more than 10,000 merchants (an increase of 10x in the past 6 months) and is processing more in transaction volume than the infamous Silk Road marketplace.  
In addition, at least three of the leading U.S. bitcoin startups have demonstrated their commitment to preventing illicit activity by registering with the financial crimes enforcement network agency of the federal government and strictly adhering to the same anti-money-laundering processes followed by major U.S. banks. Lastly, several of these bitcoin companies have raised capital from leading venture capital firms, which not only provides credentialing but will allow them to invest in areas of infrastructure, compliance and customer awareness. Bitcoin is rapidly becoming a legitimate online currency alternative. Read more here: http://www.forbes.com/sites/groupthink/2013/04/15/bitcoin-and-the-future-of-money


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