If the field of mobile payments sometimes seems overhyped, the fuss over it is currently overshadowed by the explosion of interest in the open source digital currency and payment network known as “Bitcoin.” And now Bitcoin has gone mobile.
Before we get to the current boom in Bitcoin mobile, a few quick words on what Bitcoin is and isn’t. One thing it isn’t – at least yet – is a currency in the way most people understand the term. Bitcoin isn’t backed by any government or global corporation, or by any physical commodity like gold. Instead, the value of bitcoins is guaranteed by their scarcity, which in turn derives from a system in which the owners of computer networks that manage the secure exchange of bitcoins are able to slowly create or “mine” a limited number of new bitcoins. Meanwhile, the value of bitcoins in relation to other currencies has recently been fluctuating so much that they cannot really stand in as a parallel “store of value,” being instead mostly used for speculation rather than as a new way for consumers to pay for goods or services.
The volatility in Bitcoin prices and the continuing difficulty many people have in pinning down exactly how Bitcoin works has led to much speculation that it is a fad. But for every expert giving Bitcoin the thumbs-down (former US Federal Reserve chairman Alan Greenspan recently called it “a bubble”) another gives it the thumbs-up (Bank of America recently claimed that Bitcoin could become a “serious competitor to traditional money transfer providers.”)
While Bitcoin’s “mobile moment” has been gradually building, it is only in the past few weeks that it has made a splash. As reported last week by Bloomberg News, there has recently been a wave of new companies and products targeting the space. “Bitcoin’s success hinges on how well it’s adopted and configured for mobile,” the report quoted one expert as saying.
Unlike “traditional” mobile payment apps such as the Cellum-developed Mastercard Mobile – which are designed for the purchase of products and services from companies – Bitcoin payment apps tend to be more focused on person-to-person transactions “peer-to-peer.” They also focus on the anonymity inherent to the Bitcoin system; on its homepage, the app known as Gliph lists as one of its primary selling points that users can “make deals with strangers and stay strangers.”
No doubt because of the “shadowy” nature of such transactions, Gliph and other app-makers have run into resistance, with the company revealing earlier this week that Apple had requested that the Bitcoin-sending features be removed from Gliph’s current offering in the App Store.
Despite this and other problems and limitations, at this point Bitcoin – especially Bitcoin mobile – has graduated beyond being a curiosity. Indeed, just yesterday, no less than PayPal President David Marcus jumped on the Bitcoin bandwagon, telling an audience at this year’s LeWeb conference in Paris that once volatility in the price of bitcoins comes down it has a chance of playing a major role in the future landscape of mobile payments.
Interestingly, Marcus went on to compare Bitcoin’s promise to that of near-field communications (NFC), which he dismissed as “technology for the sake of technology or for the sake of pushing the agenda of the companies supporting it, versus solving real people’s problems.”
It is impossible to say how widespread the use of bitcoins will become. But what is clear is that if Bitcoin does go genuinely mainstream, it will only do so with a strong mobile component – and alongside an exponentially larger public acceptance of mobile payments in general.