The Internet of Things (IoT) and many technological innovations are driving a vast economic transformation. Billions upon billions of smart devices are being interconnected through the Internet. Many of these devices communicate with each other, seamlessly, across country boundaries. They are also capable of performing all sorts of tasks, including financial transactions. Similarly, billions of people are interconnected and conducting businesses all over the world. This opens the gates to amazing business opportunities. But to reach their full potential in this new environment, businesses need a new payment system. In fact, businesses can no longer be supported by a payment system that is based on an obsolete monetary system. To flourish, the new economy needs a decentralized, international, and secure digital currency, such as Bitcoin, which allows cashless, fast, and efficient borderless payments.
Also Read: How Bitcoin Undermines the “Currency Wars”
Internet of Things, New Businesses, and Bitcoin
The number of people and devices being interconnected through the Internet of Things is staggering. By the year 2020, Cisco estimates that fifty billion devices and objects will be connected to the IoT cloud.
Millions of people are also interconnected via WhatsApp, Twitter, LinkedIn, Skype, and other social media channels. Amazingly, Facebook has reached a total of 149 billion active accounts across the world, as of June 2015. Moreover, in 2015, the number of worldwide email users will be nearly 2.6 billion, according to The Radicati Group, Inc.
Now, technological innovations and the IoT offer new possibilities and new businesses that were unimaginable until recently. One example is the sharing economy, which involves the shared creation, production, distribution, trade, and consumption of goods and services by different people and organizations, all over the world, using the Internet. Similarly, the crowdfunding model is now growing exponentially thanks to the world’s increased interconnectivity. And, Bitcoin and the blockchain are making new types of business transactions possible, such as those involving smart contracts, smart properties and digital escrows.
The magnitude of these facts has far-reaching consequences for businesses in particular. But to get the full benefits that the new economy offers, businesses need a different payment system, which can no longer be based on the antiquated fiat currencies. We can no longer drive today’s new economy with a three-thousand-year-old fiat monetary system.
Fiat currencies like the peso, dollar, pound, yuan, and real, are specific to countries. A few others are specific to a region or group of countries, such as the euro in the European Union and the West African CFA franc in Western Africa. Fiat currencies are prone to currency wars and hyperinflation. Moreover, to add complexity, accounting and financial reporting systems differ throughout the globe.
As a result, exchanging fiat currencies is extremely inefficient, slow and costly. Consequently, performing financial transactions across borders is a cumbersome and expensive nightmare.
The good news is that, because of its inherent properties, Bitcoin can offer the solution. Bitcoin and its blockchain are much more than a fast, secure, international, digital currency system. They are also decentralized, certified and transparent.
Bitcoin Is Transforming the New Economy
Disruptive technological innovations are being unveiled at an increasing rate in many areas. Robotics, Artificial Intelligence, genetic engineering, and driverless cars are just a few examples. With regards to payment systems, new technologies are also being constantly streamed into the marketplace. At the heart of these innovations are Bitcoin and the blockchain. Let’s look at just a couple of examples.
Contactless payments are becoming more and more popular. A case in point is EAZE, a wearable electronic wallet that uses Google glass technology to allow users to pay by just nodding.
Shapeshift is a web-based application that allows users to exchange digital currencies in just a few seconds. Users are not required to open an account. Transactions are executed without any need for email addresses or passwords. Notice that Shapeshift does not allow users to buy cryptocurrencies with credit or debit cards, or fiat money. Shapeshift has a strict no fiat currency policy.
Blockstream is working to accelerate innovation in cryptocurrencies, open assets, and smart contracts. Recently, Blockstream announced Liquid. Liquid allows almost instantaneous, worldwide, global digital currency exchanges. This is a sidechain that extends the Bitcoin blockchain while adding auditable, cryptographically strong commercial privacy. In this effort, Blockstream is in partnership with Bitfinex, BTCC, Kraken, Unocoin, and Xapo.
Bitcoin Payment System Requires a Proper Legal Framework
These new technologies and new business models are putting pressure not only on business leaders, but on policymakers as well. As a result, some of the most advanced countries are starting to adjust their policies accordingly.
For instance, in October 2015, the Court of Justice of the European Union ruled that the exchange of traditional currencies for units of the “bitcoin” virtual currency is exempt from VAT. Across the Atlantic, the status of Bitcoin is also becoming clearer. In September 2015, the U.S. Commodity Futures Trading Commission (CFTC) ruled that Bitcoin is a commodity. Previously, in March 2014, the Internal Revenue Services (IRS) declared that Bitcoin should be treated as property for federal tax purposes.
As the transition from fiat currencies to digital money evolves, a new payment system to support today’s new economy is being adopted. In parallel, legal frameworks throughout the world are slowly evolving to make Bitcoin a fully legitimate currency. So, cash payments using fiat currencies will soon be a thing of the past.
Do you think Bitcoin will be the predominant currency in the near future? Let us know in the comments below!
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