Entrepreneurs aren't really interested in seeing Bitcoin as a currency to replace the US dollar. Rather, they see in the digital currency a technology that could challenge the dominance of Visa Inc, Western Union or Citigroup Inc in the payment industry, Bloomberg reported.
Investors say headlines concerning the price of the digital currency and the talk about which retailer would accept it put the real merit of the Bitcoin at the backseat.
The report quoted the blog post written by Chris Dixon, a partner at venture capital firm Andreessen Horowitz who said, "At some point, I had an 'aha!' moment and realized that Bitcoin was best understood as a new software protocol through which you could rebuild the payments industry in ways that are better and cheaper."
According to Bitcoin enthusiasts, they are already constructing a system that would transfer money online at a lower cost compared to wire transfers, bank debits or remittances. If they succeed in removing the middlemen and come up with user-friendly tools then Bitcoin businesses could snag a share of the revenues and still be able to provide the service at a lesser cost, the report said.
Some retailers have already enhanced their profit margins by paying only 1% to have transactions done in Bitcoin to be processed. By accepting debit or credit cards, they have to pay issuing lenders over 3%. Transactions in Bitcoin are also quick, with confirmation given in as short as five minutes, the report said.
Skeptics, however, aren't too convinced. They say that the volatility of the price of the digital currency could remove the cost savings that could be obtained from the small enterprise. They also add that startups will be including their costs to transactions done in Bitcoin which would just wipe out the objective of establishing a cheaper system, the report said.
Join the Conversation