Mobile Wallet Media is a news media, analyst, marketing and consulting firm focused on the future of mobile: payments, marketing, loyalty commerce, security, prepaid, virtual currency, daily deals and the convergence of them all with social and local. The Chief Editor, Randy Smith, was the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner.
Will the Winklevii's Bitcoin venture lead to a quick flip, flop or will it float?
I don't know why, but Paris Hilton and Kim Kardashian flash into my head when I see these twins. You are as likely to see them in Us Weekly as Forbes. Don't get me wrong, they are smart, but are they not leading a charge to create a Wall-Street-like 'Credit Default Swap' or 17th century Tulip market? In addition to smart are they perhaps also lazy, foolish, glamour-seeking and maybe even a bit devious? They are risk takers and entrepreneurs. If the movie "The Social Network" was any bit accurate, they rightly deserved the equity they received in Facebook. But I will not offer speculation without representation, which is kind of popular today in politics and Wall Street.
Bitcoins are a decentralized currency. They are issued independent of government and banks. It's appears to be a safe haven for black market trading and transactions. However, it's independence of value tied to any currency has curb appeal to those distrusting government and banking institutions. But in the end, is it not sticking one's head in the sand to think that this digital currency will be allowed to run unregulated? Will it in the end just be a bubble market, expanding rapidly and popping explosively? Will the Winklevii find the investors they seek? The answer to all these rhetorical questions is YES.
But beyond governments disallowing this currency for reasons of illegal activity, it seems nowadays with all the 'Really, Really Big Data' that our 'Big Brother' government is collecting on us and other nations, the path forward is one of more transparency and governmental or financial regulation. So in the end, will not virtual currency exchanges be illegal and laws passed that shut them down?
Moving beyond legality and black-market like nature shaded upon Bitcoin's shell, let's examine the business model in comparison to what I believe will soon be the REAL AND SUSTAINABLE DIGITAL CURRENCY that will soon dominate the market and even become a trading market.
Prepaid digital currency in the form of stored-value or gift currency seems to be a more favorable and stable currency platform. This has been my opinion since 1996-7 when I came up with my first executive summary for a business in the digital payments space. I named the venture "Virtual Dollars." I'll pick up on this thread in another article soon.
Both open and closed-loop prepaid platforms are hotter than coffee at McDonalds. Prepaid is serving as the initial base for mobile/digital wallet payments and making carrying gift cards, refunds, incentives and gifting itself easier and more cost effective. The Starbucks Card Mobile and Duncan apps are two leading examples, but this is just the tip of the iceberg. Marqeta card's bonus-value offers, provides us an better glimpse of the future, especially when compared to Bitcoin. Closed-loop prepaid locks down sales and nullifies or devalues advertising, as cash is already locked and loaded.
The 'Disruptive Innovation Meteor' named MOBILE has struck the world's of retail payments, banking and marketing. Firms wanting to survive, compete and win in this new environment must adapt by embracing disruptive innovation or risk becoming irrelevant or extinct. Read story
In the end, I'd bet Bitcoin is a bubble market. Merchant backed and bonus value gift cards/currency is a much safer investment than Bitcoins for consumers, producing a 5-50% ROI. In fact, perhaps a venture that backs the purchase of pooled prepaid, closed-loop giftcards, not unlike what the Winklevoss's are doing, would not be a bad idea. The Bitcoin trading market is a very volatile one, with the risk not being worth the reward.