The open-source peer-to- peer digital currency, Bitcoin, that functions without any central authority has become a mainstream currency for the retail world. The NY Times reports that Jim Breyer, the Silicon Valley venture capitalist and early Facebook investor sees the future for Bitcoin in mainstream retail.
Mr. Breyer, an investor in Circle of Internet Financial, one of the startups, believes Circle is a way to make Bitcoin a widely adopted currency for retail payments. Jeremy Allaire, a serial entrepreneur, who announced on Friday the launch of Circle, sees it as a payment processing system for online and physical merchants, similar to PayPal.
Dan Primack, Sr. Editor at Fortune, released his interview November 1 with Jeremy Allaire.
When asked how Allaire’s VC backed startup differs from working with merchant’s acceptance of Bitcoin from other startups, Mr. Allaire replied:
“When you look at digital currency and Bitcoin specifically, at the core is utility value. It's a system to instantly transmit money and to nearly instantly confirm and process those transactions. And you can do all of that at no cost. To drive mainstream adoption you need to take that technological innovation and apply to from a merchant’s perspective of reducing costs and fraud risks”.
When queried about incentive to use Bitcoin in retail transactions, Mr. Allaire responded:
“In some cases you're already seeing businesses say, if you pay with Bitcoin, we're going to give you a discount. We think that's viable, promoting higher profit margins. Merchants are going to want to promote it because of the instant settlement and diminished fraud risks. Some of that will come via discounts or rewards or some other method, but I think they'll promote it nonetheless".
Mr. Allaire also stated, "on the consumer side, there are a number of fundamental benefits beyond possible economic advantage. One is that it provides consumers with greater privacy and security. Every time you make a credit card or debit card transaction, you're effectively giving the counter party keys to your bank account. And we know that there are real subsequent issues around identity theft and fraud.”
Bitcoin has had a dodgy exchange with the law, as some tried to use it for drug purchases. This was shut down in early October 2013 by federal authorities.
New Bitcoin is created via an algorithm through a peer-to-peer network with the goal to mitigate risk of inflation.
The U.S. Treasury has provided regulations through its Financial Crimes and Enforcement Network by issuing guidelines telling businesses involved in the exchange of digital currencies