This week’s bitcoin review focuses on the news surrounding Apple Pay and its effect on bitcoin.
There’s more to bitcoin than a consumer retail system
For bitcoin users, the biggest news out of Tuesday’s Apple event wasn’t a new iPhone or the unveiling of the Apple Watch, but a different kind of product: Apple Pay. It is Apple’s foray into mobile payments, using NFC to allow iPhone or Apple Watch users to store their credit card information on their phone and then simply tap it to pay at retail checkouts. Mobile payments have never really gotten off the ground in the U.S., which is why companies (including Google) have been trying to install some sort of a secure wallet and easier payment system into our increasingly cellular-dependent lives.
To many bitcoin users, this sounded like a death sentence for bitcoin. To the other bitcoin users, this was a blessing for bitcoin: people will become more comfortable with storing money on phones instead of credit cards so, voila; bitcoin. Just taking a look at the bitcoin subreddit showed the confusion and division among the community of what this news actually means.
The fact is that it’s too early to know if and how Apple Pay will affect bitcoin in any way. And there’s still a lot that could fail between deploying NFC readers to merchants, gaining user trust to store their credit cards on their iPhones after the nude celebrity pic scandal and signing enough merchants that it does become ubiquitous. Google has a wallet product as well, and few have cried foul that it will decimate the cryptocurrency world.
However, bitcoin is more than just a business-to-consumer product. Sure, bitcoin enthusiasts may have been preaching the days that you could walk into a Starbucks, scan your QR code and pay for your coffee. And yes, Apple Pay may one day put a dent in that plan. But the core of bitcoin is its blockchain, and that underlying technology remains its most powerful invention. If bitcoin had a marketing team, it would be time to scrap the retail agenda and remember the potential for other bitcoin applications: B2B payments, international remittances, smart contracts, even voting.
Two hours before the Apple event, Gigaom’s Stacey Higginbotham wrote about IBM’s plans to use blockchain technology to build an architecture for the internet of things. By combining the blockchain with a secure messaging protocol and Bittorrent, Big Blue thinks it can build an internet of things platform called Adept to allow the devices to communicate with one and other.
Higginbotham’s interview with IBM’s Paul Brody starts at 22:10 (and if you’re interested in hearing more from him, he’ll be speaking at Structure Connect in October):
Included in that interview, as bitcoin journalist Ryan Selkis or “TwoBitIdiot” pointed out, is that IBM is working in partnership with Samsung on Adept, and the two hope to debut it at CES in January. (That part is around the 34-minute mark of the podcast.)
Those are two large companies investing time and money to use the underlying technology behind bitcoin as a fabric for the internet of things. And it’s just a start in this one industry.
Bitcoin may have a future in retail, and Apple Pay may make a bitcoin-backed consumer revolution harder to achieve. However, bitcoin as a blockchain technology isn’t doomed, and as the IBM news shows, its potential uses and applications are just being discovered.
The market this week
Bitcoin price this week fluctuated roughly between $465 and $485, closing most days around $470. The good news (like Coinbase expanding internationally) failed to move the needle, nor did the potential bad news (like Apple Pay or Bank of England’s statements). The price has stayed below $500 since September started, and was hovering around $472 at 11:15 a.m. PST.
For background on why we’re using Coindesk’s Bitcoin Price Index, see the note at the bottom of the post.
In other news we wrote about this week:
- It’s not quite eBay or PayPal, but it’s close. Payment processor Braintree, which is an arm of PayPal and in the eBay family, announced its incorporation with bitcoin via Coinbase. That means companies that use Braintree to process their payments (standout names include Uber and Airbnb) now have the option to accept the cryptocurrency. It doesn’t mean that eBay is open to accepting bitcoin just yet, but it’s one step closer. We’ll have to wait this one out.
- What does Peter Thiel have to say about bitcoin? For one thing, the payment system is “badly lacking.”
- Bitcoin also continues to spread across borders as more businesses, notably Overstock.com, open up bitcoin payments to international customers. Some businesses have been testing the waters with it, but they could have a lot to save if they cut out international credit card costs.
- Following that trend, Coinbase announced its first major expansion into 13 European countries. BitPay had been breaking ground there (including opening their first office in Amsterdam), so it was logical step for Coinbase to follow their lead overseas.
Here are some of the best reads from around the web this week:
- Was Satoshi Nakamoto hacked? In a couple confusing exchanges with both Vice and Wired, it looks like both the original Satoshi and a hacker (who may also have been the same one to hack “Bitcoin Jesus” Roger Ver) are responding and sending emails from Nakamoto’s account. Someone also posted on Nakamoto’s original P2P Foundation post that his identity, passwords and account information were being sold on the darknet. There have been few updates since earlier this week if the ransom demands were met and what negotiations are like between Satoshi and the hacker threatening to dox him.
- Famed Princeton economist Paul Krugman called bitcoin “largely a fad that will collapse one of these days” in Princeton Magazine.
- Ethereum, its own blockchain project that comes with its own programming language, raised $15 million to hire more developers to work on its core, according to Wired.
- Meet the two bitcoin funds that are racing to get to market, led by Barry Silbert and the Winklevoss twins.
- On Friday morning, TeraExchange became the first company receive approval from U.S. federal regulators to launch a swap, according to Reuters.
- The Bank of England released its own report on bitcoin (along with the educational video below that provides a pretty good explanation of how the cryptocurrency works). The report was overall skeptical that bitcoin plays a role as money in society right now, according to CoinDesk’s wrap-up, but it does acknowledge that it could do so in the future.
Bitcoin in 2014
The history of bitcoin’s price
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A note on our data: We use CoinDesk’s Bitcoin Price Index to obtain both a historical and current reflection of the Bitcoin market. The BPI is an average of the four Bitcoin exchanges which meet their criteria: Bitstamp, BTC-e, LakeBTC and Bitfinex. To see the criteria for inclusion or for price updates by the minute, visit CoinDesk. Since the market never closes, the “closing price” as noted in the graphics is based on end of day Greenwich Mean Time (GMT) or British Summer Time (BST).