Three uses of Bitcoin that will change the world



Generalizing Bitcoin will have profound consequences: it is a new form of currency, simplifying and improving existing solutions, allowing previously impossible applications. But even the most fervent supporters of Bitcoin are still struggling to measure the potential impact, as the opportunities open to us are immense. In the short to medium term, however, we can anticipate at least three essential uses, which will have major consequences.


1. Transfers of quick international funds and cheap


Send from person to person money from one country to another is a common practice today. If some of your friends or your family members have gone to live abroad, or if you are an expatriate working in a third country, you will certainly, and even regularly, having to make a country remittances to another.


In the case of migrant workers, there is also an English word to describe this practice: remittances. A remittance means sending, by an expatriate worker, a part of his salary to his family back in her home country. More generally, the word is synonymous with sending sums of money relatively small (of the order of hundreds of euros), from one country to another.


These remittances are the subject of many studies, and the World Bank devotes regular reports and an extensive website. And due, the total annual volume of remittances represented a substantial volume of $ 542 billion in 2013, sent by 232 million people. The World Bank estimates that the overall volume will exceed $ 600 billion in 2015.


Where the topic is interesting, under the Bitcoin angle is when you consider the financial costs accompanying these transfers: in January 2015, the World Bank estimates that the costs of sending $ 200 abroad are on average 8% (and indeed has the ambition to bring down to 5% in five years).


The calculation is easy to do: every year, these little international transfers thus generate between 40 and 50 billion dollars in shipping. A nice cake, shared today banks and specialized financial institutions.


Obviously this is an 8% global average. France is not a very good student in this area and the costs are on average higher than 10%. For example, sending money to Algeria from France is subject to a 13.5% rate. Specifically, send € 140 will cost you an average of 19 €. And some banks will charge you this service € 37 (!).


Knowing Bitcoin, this seems shocking. Send the equivalent of 200 € via Bitcoin (that is to say, about 1 bitcoin), anywhere in the world, will generate significant costs (far below 1%).


Added to this is the time factor: if there are almost immediate services such as Western Union or MoneyGram, bank transfers, they require typically three days or more. With Bitcoin, it takes at most 10 minutes (often less) to send any money anywhere.


In summary, it has one side often slow systems (sometimes very slow), relatively expensive (sometimes very expensive) and the other was Bitcoin, with almost immediate and virtually free transfers. It is not necessary to be a financial genius to understand that people will quickly plebiscite an efficient, cheap and perfectly adapted to their needs, to send money abroad.


Not surprisingly, the remittances market attracts a strong interest in the Bitcoin universe. Several specialized services in remittances to specific countries via Bitcoin, have emerged in recent months: Palarin for the Philippines, BitPesa for Africa, Beam for Ghana, CoinPip for several countries (Australia, Brazil, Canada , China), for example. Most of these services operate in a similar way: we send bitcoins to country of origin, which are immediately converted into the local currency. It’s fast, secure and accompanied by far more reasonable costs. Associations have also created to promote electronic currencies, such as the Africa Digital Currency Association, which criticizes “the oligarchy of traditional money transfer companies and their exorbitant fees unjust.”


There is no doubt for me that international transfers of small amounts will be the first “killer application” of Bitcoin. Banks and specialized companies have eaten their white bread, and will see gradually erode the jackpot of over $ 40 billion until they swallowed each year.


2. An alternative to banks for those who do not


Half of adults living on this planet have no bank account. This represents 2.5 billion people who today have no other means of payment than cash.


A large proportion of these people live in poor countries, particularly in Africa and Asia, but also in highly developed countries (for example it is estimated that 12% of Americans have no bank account).


Bitcoin is, again, a solution found and all will play a major role in providing the “unbanked” largely flexible tools and more secure than are traditional rooms and tickets.


Pretending that Bitcoin, sophisticated digital technology, is a way forward for developing countries may seem bold, even utopian and unrealistic. However, this view makes sense when we consider a simple fact: there are many more mobile phones in use than people with a bank account


.

From there, knowing how easy it is to create a Bitcoin wallet reasonably secure with a simple phone and how it is often difficult (or impossible) to open a bank account, it is easy to predict a natural evolution: mobile will emerge as a preferred alternative, natural and immediate, to manage money without bank but via Bitcoin.


This opinion is shared by many entrepreneurs of the Bitcoin universe. “I sincerely believe that Bitcoin is the best hope for the billions who do not have bank accounts, to participate in the global economy,” said Wences Casares eg, serial Argentine entrepreneur, millionaire but today very humble origin, co-founder of Xapo, an ultra-secure Bitcoin wallet.


“The current basic financial services are more expensive and more exclusive than they should be. If we can evolve the digital finance to achieve a light and almost free service, we can offer it to everyone, including people who are excluded today, “says Lui Smyth, CEO of Coinjar a Bitcoin wallet online operated from the UK. It also stresses, correctly, by nature democratic and egalitarian essence of Bitcoin: “The creation of a Bitcoin wallet is free and instantaneous, largely divested restrictions, and provides efficient service to the rich than poor. “


“Many countries (Argentina, Zimbabwe, Russia …) would be much richer and much better would bear if they had had Bitcoin or other electronic currencies for several generations, rather than using paper currencies’ advance even Dan Morehead, CEO of Pantera, a venture capital firm specializing in Bitcoin projects.


In a fascinating lecture earlier this month in Miami (full text here), Morehead explains how “Bitcoin will have a significant and positive impact for developing countries”, and how we will soon enter the era of ” money on mobile. ” He cites the example of Kenya, a country where the use of mobile to handle financial flows already proved. “Digital currencies or money on mobile are no longer futuristic ideas or science fictionesques only raised in Silicon Valley. This is the real reality in Kenya. Kenya is the world leader in mobile money. More than three quarters of the adult population uses a mobile phone for business and most of the country’s GNP consists of mobile money, “he described.


This reality is already being services by providing a form of banking, without banks. In the Philippines, Coins.ph allows employees who do not have bank accounts to receive their salaries via Bitcoin, and the company has recently partnered with the US operator BitWage to pay in this way salaries expatriate workers.


Countries in which has developed a strong culture of mobile will therefore easily adopt Bitcoin, and it can go very fast. There are some days, the messaging solution Telegram, proud of a community of 50 million users, has launched Telebit, service is very easy to send small amounts in between Bitcoin users. Bitcoin wallets are created for each user on the fly, after sending a simple message to the service. Overnight, tens of millions of people without even knowing Bitcoin or having to install any new application their mobile, have become potential users of Bitcoin.


The movement is engaged, and the progression of Bitcoin in so-called “poor” countries will probably follow a dizzying growth. I’m even willing to bet that, paradoxically, the acceptance and widespread Bitcoin will be at a much faster rate in the less developed countries than in our “rich” countries, characterized by a strong banking culture (and powerful monopolies that go with it).


3. Identification and storage in decentralized mode


Bitcoin is a currency, but it is also a protocol, characterized by a decentralized and shared register, the block chain. This chain of blocks, freely available, contains encrypted so all the data needed to reconstruct all the Bitcoin transactions. But nothing requires these transactions to bear on financial exchanges. A Bitcoin transaction is primarily an exchange of digital data between two computers, this exchange being duly validated and registered in a public file sharing, later viewable by everyone, from anywhere.


In fact, a possible use of Bitcoin is the creation of registries for validating all types of documents to prove the anticipation or the paternity of a data set, or to identify people and goods.


Many people feel that there is in this regard a tool of unparalleled power. Some even think that the whole of the Internet could be redefined or restructured on the basis of the block chain principle (this is also good for selected alternative currencies designers inspired Bitcoin).


Specifically, any user can securely store digital data defining its identity in the chain of Bitcoin blocks, becoming a universal means to register somewhere or prove their identity. Storage of various data, certification of official documents, even the very notion of copyright could be radically transformed by the principle of block chain.


Many more or less advanced projects in this direction. For example, Blockstore is a tool for storing names in the Bitcoin block chain and their associated data securely. Thereafter, anyone can conduct research on these names, and obtain the corresponding data (details here). Another service under development, ination considering allowing any user to store in the blockchain all its official documents – passport, birth certificate, marriage contract, etc. Proof of existence is, he, to protect any type of document certifying paternity via Bitcoin, while Blocksign allows the official signing of a contract or agreement between several people, the authentication process is validated and secure with Bitcoin.


Several similar projects, sometimes more complex (smart contracts or colored corners, for example), are in the pipeline, and all benefit from one of the key principles that governs the operation of Bitcoin: non need for a trusted third party. Validation and secure exchanges are made by consensus, through the Bitcoin protocol, which manages just as perfectly financial exchanges than any other type of transaction.


All that remains embryonic, but it seems very likely that many of the applications and services made possible by Bitcoin will not be financial, but will lead to even transform notions of validation, certification, and identification through secure, decentralized and universal protocols based on the Bitcoin block chain.


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