“Is it the first step toward changing monetary systems?”
Do a quick Google search, and you’re sure to find plenty of opinions on Bitcoin. Some focus entirely on downsides and drawbacks. Others take the point of view that the Bitcoin system could be the first step towards revolutionizing the world’s monetary systems.
A recent article from TechRadar.com discussed the bets that Google, Apple and other high-tech companies are making that may boost the legitimacy of Bitcoin and other digital currency ideas. These companies feel that digital money could completely replace cash, perhaps as early as the middle of this decade. These high-tech companies don’t limit the definition of digital money to systems like Bitcoin. Instead, digital money includes any form of electronic transaction, ranging from Bitcoin to debit cards. But they would lay the foundation for greater growth for the Bitcoin system
(http://www.techradar.com/news/phone-and-communications/mobile-phones/the-death-of-money-1033374).
Indeed, digital payment has become a hot topic amongst high-tech companies in recent years and a number of different solutions are currently being explored. One of the ideas would allow you to make a purchase by tapping your smartphone against a another mobile device. NFC, short for Near Field Communications, would be a key technology in allowing mobile-to-mobile payments.
Accounts we hold at places like iTunes and Google could automatically track our online purchases of apps, music, video and games. Bitcoins would have the potential to work inside this arena. Because the Bitcoin system is already in place, you could see merchants adopting it, rather than trying to create an entirely new digital payment system.
In the TechRadar article, PayPal president Scott Thompson provided information on his feelings for the future of cash versus the ability to make transactions using smartphones and NFC. “We believe that by 2015, digital currency will be accepted everywhere in the U.S., from your local corner store to Walmart,” he said. “We will no longer need to carry a wallet.”
To make this mobile-to-mobile payment system work, manufacturers must include NFC chips in their smartphones. Apple has plans for adding NFC chips in its phones, as do Google and RIM. Phones that don’t contain NFC chips and circuitry could add that capability through SIM cards. How quickly this technology can be built into a large enough number of smartphones to make a difference remains to be seen.
One key to making an NFC smartphone payment system work would be adequate security. After all, what if you lost your smartphone? What if someone stole it? How could you prevent them from running your account balance to zero?
Like the Bitcoin system, NFC would need to include some sort of encryption to ensure secure transactions over the wireless connection. As an added safeguard, NFC could require users to enter a PIN on certain transactions. An NFC smartphone would need a method for allowing it to be completely disabled whenever reported stolen or lost, too.
If technologies such as NFC become commonplace, a fully digital system such as Bitcoin will surely benefit. The problem with people failing to trust the Bitcoin system will shrink as digital money becomes used more often. Bitcoin has a head start.