Dominant Digital Currency

Bitcoin - Pixabay

How often do you pay with Bitcoin? What about Ether? Up until recently, Bitcoin has been the dominant digital currency. Ether may change that.

Unlike traditional currencies, Bitcoin and Ether are tracked and maintained by a network of computers. Specifically, a separate, global computer network of volunteers hosts and maintains each currency (e.g., Ethereum is the network for Ether). These volunteers are rewarded for their participation with the new digital tokens that are released onto their network each day. No government or company is in charge. So, the prices of both Bitcoin and Ether are established on private exchanges, where people can sell the tokens they own at the going market price.

If you, like many people, are skeptical of these digital currencies, their market value may get your attention. As of June, the combined value of all Ether and Bitcoin is worth more than the market value of PayPal and is approaching the size of Goldman Sachs. According to the New York Times, Ether’s value alone has risen 4500 percent since the beginning of 2017.

User Interest at the Corporate Level

These currencies are not just found in occasional transactions by early adopters and technophiles. Bitcoin has worked its way into mainstream commerce. Companies like Overstock.com and Expedia accept Bitcoin for purchases. Currently, there are fewer real-world uses for Ether, but it was designed to do much more than serve as digital currency. The network of computers hooked into Ethereum can be harnessed to do computational work which makes it possible to run computer programs on the network. Furthermore, the appetite for using Ethereum continues to grow. Over 100 companies (including Toyota, Merck and Samsung) have joined the nonprofit Enterprise Ethereum Alliance to build tools that will make Ethereum useful in corporate settings.

Key players in the financial sector are taking digital currencies like Bitcoin and Ether more seriously. For example, Fidelity Investments will allow its clients to see their holdings of Bitcoin and other digital currencies on its website. At a recent blockchain conference in New York City, Fidelity chief executive Abigail Johnson shared, “I love this stuff – Bitcoin, Ethereum, blockchain technology – and what the future holds.” Blockchain, a shared online ledger of transactions which first emerged as Bitcoin’s underlying technology, has been attracting growing investments by established financial institutions which hope it can help them save money and time.

More than 90 banks worldwide, including HSBC and Deutsche Bank, are exploring the potential of blockchain. Santander InnoVentures, a venture capital fund, estimates that this new technology could save banks up to $20 billion a year by 2022, by making transactions and bookkeeping faster and more streamlined.

For those who wish to purchase digital currency but find the idea of the transaction difficult to grasp without physical proof, it might be helpful to have a bridge. This bridge already exists thanks to Zug, Switzerland. This town of 30,000 people 20 miles south of Zurich has become known as Crypto Valley in the financial world due to the digital currency entrepreneurs it attracts. It is here that Bitcoin Suisse created the bridge in the form of a Bitcoin ATM.

The ATM isn’t really necessary, because Bitcoin is made up of lines of computer code instead of a physical form. Nonetheless, Bitcoin Suisse has installed 10 of these ATMs across Switzerland. The ATM accepts Swiss francs and euros in exchange for a slip of paper with a code that represents the equivalent amount in Bitcoin. Scan the code with your smartphone, and the currency is yours.

Maybe you don’t deal with digital currency on a consistent basis like those in Zug. Given the increasing interest and activity of investors, businesses and entrepreneurs, there is a pretty good chance that some form of digital currency (whether it is Bitcoin, Ether or something else) will soon become a regular part of your transactions.

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM organization tweets here: @ryanlahti

(Photo: Bitcoin, Pixabay)

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