Trading dollars for euros, Yen, Icelandic króna, or any other currencies
typically involves hefty conversion fees.
Those fees soar at airport currency exchange counters.
A new Goldman-Barclays app that uses the Bitcoin blockchain algorithm may
reduce or eliminate those exchange fees.
When that happens, currency exchange counters, now common all over Europe
will soon vanish.
Please consider Barclays Partners with Goldman-Backed Bitcoin Payments App.
Barclays is linking up with Circle Internet Financial, a US mobile payment
start-up backed by Goldman Sachs that uses bitcoin to transfer central bank
currencies, as digital money increasingly moves into mainstream finance.
It is the first time a European bank has allowed a digital currency
company to use its infrastructure — enabling it to transfer sterling and
euros — according to the two companies.
Boston-based Circle, which is valued at $250m, is expanding into Europe
after launching a dollar transfer service for US users late last year.
From Wednesday the payment app — which transfers dollars by first
converting them to bitcoin — will also be able to transmit sterling between
users of the app by linking to their debit cards.
The tie-up with Barclays means Circle will be able to move sterling across
the blockchain — a public ledger where bitcoin transactions are verified and
recorded.
Users will be able to exchange sterling and dollars immediately and free
of charge.
Barclays said it was interested in “accelerating positive uses of
blockchain”.
Using the blockchain means that money can be exchanged without using a
bank clearing system.
Euros, Yen, Yuan Coming Up
Jeremy Allaire, CEO and founder of Circle, said the app would add euros
“in coming months”, and had plans to add Asian currencies in the future.
Allaire claims blockchain will disrupt the mobile payments industry,
calling it a “blank slate” for innovators.
“Payments are the next thing to be commoditised as a free service,” said
Allaire.
The only thing I cannot figure out is why there needs to be an exchange to
Bitcoin to go from dollars to the British Pound. Whatever the current reason,
I expect that necessity will vanish.
If not, Bitcoin, will take off as a widely used currency for international
use.
Free Payment Services?
The Apps have arrived, but they will be as free as the “free” ATMs we once
knew.
There will be fees. Over time, those fees will escalate.
Exploring the Good Side
The good side is competition rates to keep the fees lower than credit cards
currently charge on foreign transactions, and certainly way lower than
currency exchanges charge for swapping cash.
Currency exchanges will soon vanish completely.
Exploring the Downside
The downside is the inevitable march towards digital currencies with
governments tracking every penny you have and how you spend it.
And when the conversion to digital currencies is complete, central banks
will have free rein on imposing whatever negative interest rate schemes they
so desire.
“Free” won’t be “free” the way this will be implemented.
Mike “Mish” Shedlock
