Despite
the bad News of the US$5 million worth of Bitcoins stolen from Slovenia-based
Bitstamp Exchange, faith in the Cryptocurrency is at an all time high.
They
showed this in a big way on Tuesday January 20th 2015 when they
invested some US$75 million during a Series C funding round in Payments
processor and wallet startup Coinbase as reported in the article “Coinbase
Raises $75 Million in Funding Round”, published Jan. 20, 2015 9:00 a.m. ET
By PAUL VIGNA And MICHAEL J. CASEY, The Wall
Street Journal.
The
News of the investment in this Bitcoin Wallet was announced on their blog
article “Coinbase
Raises $75M from DFJ Growth, USAA, NYSE, and More”, published JAN 20TH,
2015, Coinbase.
VC
(Venture Capitalists) seems to think there is a future in Bitcoin.
Especially
as Microsoft and some other Tech giants are now accepting Bitcoins as legal
tender for the purchase of their products and using Bitcoin Exchanges as their
intermediaries as noted in my blog article
entitled “Microsoft
accepts Bitcoins for Purchases - Napster of Cryptocurrency set to explode in
Jamaica in 2015 Year of the Sheep”.
This
is the largest VC investment in any Bitcoin startup since the inception of the
crypto-currency some seven (7) years ago as noted in the article “Coinbase
raises $75M in largest Bitcoin funding round to date”, published Jan. 20,
2015 - 10:33 AM PST by Biz Carson, Gigaom.
But
what’s more significant is that it’s the first time that financial
institutions, including Brokerage firm are numbered among the institutions as
noted in the article “Bitcoin
Receives Nod From Financial Sector In Coinbase Funding Round”, published
20.01.2015 by Lauren Orsin, ReadWrite. To
be specific, those financial institutions, whose names are numbered among the
other VC’s are as follows:
1. Andreessen
Horowitz
2. BBVA
(Banco Bilbao Vizcaya Argentaria), a Spanish Bank
3. DFJ
Growth
4. Former
Citigroup CEO Vikram Pandit
5. Former
Thomson Reuters CEO Tom Glocer
6. NYSE
(New York Stock Exchange)
7. Ribbit
Capital
8. Union
Square Ventures
9. USAA
(United Services Automobile Association), a financial services firm
Their
names stand out quite quickly, even if you’re not an investment banker or just
a former Telecoms Technician like myself, as clearly, they SHOULDN’T be
investing in a currency that’s extremely volatile.
So
why are they throwing their money into the Bitcoin Ring? Simple answer: The
Global Unbanked!
Coinbase’s Financial
Investors in Series C Funding – The Global Unbanked in the Developing World
They’ve
apparently taken an attitude that says, “well, if this is the future, let’s at
least take a ride to see where it’ll take us”. The reason for this outlook has
to do with the Unbanked in Developing World Countries.
In
countries like Jamaica, the Unbanked, meaning those without fairly easy access
to a Bank account and banking Services is a large enough number that they’d be
of interest to Mobile Money Ventures.
Already
JCCUL’s CONEC Mobile Wallet,
now with Paymaster support, is now able to tap into the US$2 billion
Remittances Market here in Jamaica since September 2014 as noted in my blog article
entitled “JCUES
now CONEC Mobile Wallet - Why CONEC Mobile Wallet still inconvenient despite
Paymaster and Remittances in the JCCUL-Mozido Jamaica mix”.
This is based on research done by University of the
West Indies as mentioned in the article “BOJ
Developing Agent Banking System To Reach The Unbanked”, published Friday
October 11, 2013 by Avia Collinder, Business Reporter, The Jamaica Gleaner.
The
UWI Research into the Unbanked was conducted by Associate professor, Department
of Economics at Texas Christian University Dr Dawn Elliott and a team of
statisticians from UWI as mentioned in the article “Jamaica
Counting On its Unbanked”, published Friday, September 30, 2011, the Jamaica Observer.
The
figures are as follows:
- 34% of persons above 18 years
old in Jamaica do not own Bank accounts i.e. Unbanked
- 66% of persons above 18 years
old in Jamaica own Bank accounts i.e. Banked
- 12% of Banked have
transactional accounts that they use to conduct business i.e. Highly
Banked
- 80% of persons above 18 years
old in Jamaica have limited access to a low-cost, efficient and easily
accessible payment channels
This
study is so important, it was cited twice by State Minister in the Ministry of
Science, Technology, Energy and Mining Julian Robinson in a Tuesday
May 28th, 2013 Sectoral Debate and later in a Wednesday
June 11th, 2014 Sectoral
Debate.
Unbanked in Jamaica and
the Developing World – Bitcoin opportunity that Banks are ignoring
Most
likely these Banks have seen such figures and those for other Third World
Developing countries and realize that canny of them have no Bank accounts to do
business online, be it making money online or E-Commerce using a VPN (Virtual
Private Network) or Proxy to mask your location as described in my blog article
entitled “Surfing
the Internet Anonymously using VPN - How to use Streaming Set Top Boxes over
VPN”.
Local
Banks in Jamaica are barely taking an interest in making E-Commerce options
such as Prepaid Credit Cards available to the general population for the
purpose of shopping online as noted in my blog article entitled “How
to purchase items and subscribe to Magazines online and ship them to Jamaica”.
Most
Local Banks in Jamaica also do not explain to customers how to do e-commerce
such as buying and selling on Ebay as explained in my blog article
entitled “How
to make money as an EBay Seller online - Everything in Jamaica from Rare Coins
to Unique Craft Items”.
These
Unbanked and worse the Banked who do not use their Bank accounts for online
transactions creates an opportunity for International Banks to offer Banking
Services that can be accessed over the Internet. Bitcoin Wallet companies like
Coinbase make this possible and hence the reason for Banks to invest.
Banks and Bitcoins –
Potential customers in Developing World Countries E-Commerce
The
Banks in the Coinbase VC round are taking an interest in Bitcoin because they
realize that not only do Bitcoins have a low transactional charges, which make
them attractive to the unbanked, but they're accounts are already accessible
online and usable via Bluetooth and NFC (Near Field Communication) enabled
smartphones and NFC Stickers.
This
makes Bitcoin Wallet like Coinbase attractive to invest in, as they’d allow
International banking instructions to have customer outside of their boundaries
access their various services as well as buy and sell online.
In
short, the low transactional charges, online accessibility on a Smartphone,
built in e-commerce capability and anonymity in terms of your identity in
making transactions online means that Bitcoins may be a solution to getting the
Globally Unbanked to become a part of the Global Banking System.
The
fact that Microsoft can see that accepting Bitcoins as noted in my blog article
entitled “Microsoft
accepts Bitcoins for Purchases - Napster of Cryptocurrency set to explode in
Jamaica in 2015 Year of the Sheep” is good for business and augers well for
a future.
Jamaican Banks and
Bitcoins – Local Bitcoin Exchange to convert Bitcoins needed
In
most Developing World Countries like Jamaica, where personal income
disqualifies many for Credit and Debit Cards, Bitcoin Wallets and transaction
in Bitcoins may be the gateway to many making money online with minimum setup
costs.
Ironically,
this is a part of Coinbase's mandate and is the main reason they've been
granted so much VC money from Financial Instructions as noted in the article “Coinbase
Confirms $75M Raise From DFJ, NYSE, Strategic Banking Partners”, published
20.01.2015 by Kim-Mai Cutler, Techcrunch.
Now
all that's left is for local Banks in the Developing World to be approached by
Coinbase to do conversions of Bitcoins to Jamaican Dollars spendable either via
Mobile Money Wallet or Debit Cards.......that is, it the Unbanked need such
facilities.
Personally,
I’m expecting the JCCUL to announce quite soon that they accept Bitcoins, being
as their CONEC Mobile Wallet can
now do Remittances and Paymaster is their Retail Payment Service Providers as noted in my blog article
entitled “JCUES
now CONEC Mobile Wallet - Why CONEC Mobile Wallet still inconvenient despite
Paymaster and Remittances in the JCCUL-Mozido Jamaica mix”.
If
more merchants in Jamaica start to accept Bitcoins, the Banks may wake up one
day and discover that their POS (Point of Sale) Terminal are being returned by
businesses as they switch to NFC Readers to process Mobile Money Wallets filled
with Bitcoins and from smartphone toting Millennials!
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