When I stumbled across Bitcoin (or Bit-O-Coin, as my wife likes to call it) a few years back, my spidey sense started tingling. Since that time, I’ve made a few off hand remarks about the future of crypto-currency and received the expected “it’s another Dutch Tulip thing”. While I’m not an expert on the financial markets, I do have an excellent trade record for identifying disruptive technology changes and I’ve concluded that crypto-currency is here to stay.
The financial meltdowns in the last decade have proven that governments can’t get the job done. Perhaps the world was simple enough or we were just naive in thinking that government was capable of protecting us from the catastrophic effects of a financial crisis. If the government’s support of A ratings of shady instruments like CDO’s didn’t convince you otherwise, guess nothing will. Globalization and technology have made the pace and complexity of markets and money way too much for inherently slow government processes to keep up.
Crypto-currency is like the internet for money. One of the reasons the Internet survived and was so successful is that it provided what people wanted, and was designed from the ground up to be remarkably resilient. The dangers to the world economy are very real - When will the Chinese bubble burst? Will the Euro survive? What’s the future of the dollar given the current U.S. money printing mania? A peer-to-peer system capable of providing liquidity for trade across a broad contingency of potential disasters is a very good thing and a strong feature that makes crypto-currency more than a fad.
Crypto-currency is a democratic movement. We’ve been writing a lot about the Age of the Customer here at Forrester, and one of its imperatives is “give customers what they want or they won’t be your customers for long”. In the simpler world of yesterday, we happily used the currency our government furnished, but today global currency markets give us options and crypto-currency is yet another. People want the ability to trade in a safe, secure, cheap, and private fashion without some government or company’s hand in their pockets through taxation and fees. Crypto-currency provides just that, and people will keep choosing what’s in their best interests.
The problems are obvious and challenging. We have a long way to go before a stable crypto-currency becomes an instrument of trade and not speculation, and we have big regulatory issues to solve. The fact that crypto-currency makes illegal activity and terrorism easier to fund is deeply disturbing. That said, the drivers are simply too powerful - crypto-currency is around to stay and the changes to our global economy because of it will be staggering. So take a reality pill and strap in.
This blog originally appeared at Forrester Research. Published with permission.