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The theory got another boost this week when a report by a Bank of America currency strategist noted Bitcoin’s “clear potential for growth” and observed that Bitcoin’s market cap (see note below) already exceeded that of Western Union:
Western Union executives are probably not shaking in their boots about the chart just yet since Bitcoin’s value has been fueled by speculation, and very few people are using it to actually buy things or transfer money. But they may be worried about how Western Union’s transfer service, which charges around $8 to move $100 worth of money, will fare in the future against a service that charges nothing at all.
And Bitcoin’s potential is not just academic: early this year, entrepreneur Wences Casares described how some in Argentina are responding to a currency crisis by passing around Bitcoin on old Android phones.
So is Western Union worried? In response to emailed questions, the company provided a terse statement that didn’t refer to Bitcoin directly. It read in part:
We will continue to track the use of virtual currency in the market, and expect that it should comply with the same regulations and oversight that the rest of the financial services industry must adhere to, to ensure that consumers are protected.
In response to a follow-up question about about whether the company would ever support Bitcoin, a spokesman would only repeat that “Western Union proactively leverages macro trends to help shape our approach to product and service development.”
Western Union also referred to working closely with regulators and to “acceptable currencies,” possibly suggesting that it thinks (or wants others to think) that Bitcoin is more of an outlaw currency.
So there you have it. A giant company that made its name on telegrams, and now makes 81% of its $5.7 billion annual revenue through consumer to consumer money transfers, appears unlikely to jump on the Bitcoin bandwagon anytime soon.
Note: There’s a lively debate among economists and financial journalists over whether Bitcoin is a currency or a commodity (or something else) and whether it’s correct to say it has a market cap. In this case, the Bank of America report appears to use market cap/enterprise value on the grounds that Bitcoin’s supply is finite and countable.
This story was corrected at 5:59pm on Friday to state that Western Union’s annual revenue was $5.7 billion not $150 million.