Payments Views


Learnings from the Bitcoin Workshop

Bryan Derman and I led Glenbrook’s second Bitcoin: Basics and Beyond workshop a couple of weeks go, this time in NYC from the 22nd floor board room of the Downtown Conference Center, a great space (the staff took great care of us, too, thank you).

As with every Glenbrook workshop—especially with our smaller Insight workshops on topics like Bitcoin, Data in Payments, Payments in Europe and B2B Payments—the questions and discussion enriched the experience for Bryan, me, and the business leaders who joined us for the workshop. The combination of commentary, insight, and the process of clearing up misconceptions made for a rich dialog that served everyone.


Now that we have further experience leading groups through the often confusing details of math-based currencies, I’ve got a few observations:

Misleading Default Contexts. Those of us with strong US payments industry backgrounds use the context of consumer payments as the first lens through which we look at new payment methods. That’s no surprise given the primacy of card-based payments and the years-long heightened expectations for the always “about to take off, Real Soon Now” promise of mobile payments.

But in the case of Bitcoin and other math-based currencies, that consumer payments-based view doesn’t serve because, fundamentally, card payment aren’t broken and Bitcoin doesn’t offer US consumers a compelling reason to switch away from cards. Today.  The consumer payments focus, we sometimes find, can distract from other, more compelling use cases.


Another contextual mismatch operates at a broader level. Those attending our workshops come largely from the US, Canada, Western Europe and Asian countries with stable currencies. That stability puts into question the utility of shifting to Bitcoin as a currency or store of value. Putting the investment use case aside, for most citizens of these countries, the local coin of the realm works just fine.

But don’t expect residents of Buenos Aires to view the Argentine Peso from the same perspective. The fiscal mismanagement of their currency makes alternatives like bitcoin attractive. Imagine how good bitcoin would look to the powerless citizens of Zimbabwe who suffered from hyperinflation and a currency collapse in 2008 only to confront deflation today.

We are certainly intrigued by the capabilities of math-based currencies, but think it’s unrealistic to believe that they might quickly overtake incumbent payment systems that already work well for common use cases.  We’re far more focused on identifying payments use cases that still exhibit significant points of friction that might be neatly lubricated by the application of MBC technology.

“It’s going to take a long time” vs. Jerry Brown. Another observation is the multi-speed nature of the Bitcoin ecosystem’s evolution. Our default opinion has been that the evolution is going to take a long time because the Bitcoiners have a lot to learn about payments and the payments industry, as the incumbent, is both properly focused on shorter term concerns and suffering from the incumbent’s myopia when viewing new market entrants.

Then we’re reminded that Bitcoin has momentum.  Take California’s legislature and Governor Jerry Brown signing legislation making the use of alternative currencies legal in the state. Canada recently passed a bill giving stronger guidance to virtual currency operators with respect to AML.  Both steps should broaden legitimate uses of math-based currencies.

Bryan and I are hoping more payments industry incumbents make the time, now, to take the deep dive into Bitcoin, Ripple and other math-based currencies, either through a private one-day workshop or our upcoming public workshops in Atlanta and New York. While I hesitate to use the D-word of disruption, niche-based opportunities are out there and shifts can happen at unexpected speed.

To wrap up, we are grateful to those who attended and for their universal appreciation for the session and how we conducted it (thanks for the kind words!). While not everyone’s opinion of Bitcoin changed from black to white, we painted Bitcoin’s many shades of gray and that was the mission.

This post was written by Glenbrook’s George Peabody.



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