Some very interesting comments from Peter Thiel, co-founder of PayPal, on Bitcoin.
This morning on CNBC he said that recently announced plan to split PayPal from eBay, "makes sense for them to naturally spin it out again and for PayPal to focus 100 percent on payments,"
But, he then expressed doubts regarding Bitcoin's role as a payment system.
"I think it's worked on the level of a currency, where it's a speculation on the level of a currency, but it's not yet worked on the level of a payments system, and you need to get the payments system to work, not just for illegal payments but for legal payments."
I really see it difficult for Bitcoin to emerge as a payment system against PayPal and such other players has Twitter, which appears to be making a move in the sector (SEE:Twitter Users in France Can Now Tweet Money).
The money transfer sector is going to show spectacular advances in coming years, but it is extremely unlikely that Bitcoin will be an important player. The sector is going to be very crowded and outfits like Twitter (and PayPal) have built in audiences that Bitcoin comes nowhere near matching.
Bitcoin now has a stigma associated with it besides the technical issues and the instability of the value. The stigma is that as a "secure" payment system, it isn't secure at all. Now, irrespective of the reality, the perception is that people were using it for illicit purposes and the government has the ability to find those people and prosecute them.
ReplyDeleteBased on how the government played the arrests involved with Silk Road transactions, to the common person they killed the "perception" of it being an anonymous and untraceable settlement means.
People will put up with a decent amount of "costs" in order to get real anonymity. But it has been shown that Bitcoin has none of that, along with technical usage hurdles and widely fluctuating values, as well as a mining procedure that given enough computing power thrown at it, can create a problem for the whole transaction system that has already occurred.
I've always seen Bitcoin as an alpha or beta product. Anyone who understands the history of the technology industry knows that first to market with an idea doesn't mean anything. Very frequently, it is the tweaking of that idea by someone or some other company that creates a breakthrough product. See Betamax vs. VHS, Blue Ray vs. HD DVD, Apple's Macintosh OS / mouse / icon point-and-click taken from the Xerox Alto, then Microsoft creating Windows taken from the Mac.
As an innovating product, Bitcoin had enormous headwinds to begin with. With its key allure of anonymous transactions blown out of the water, the product is a lame duck that will be put down by someone who recognizes this, and has the ability to fix the inherent issues in a different product.