Dave Birch, Consult Hyperion

that they have just acquired from eServGlobal. I remember Consult Hyperion doing a study some years ago on using cryptocurrency as an international backbone for internal use for a large foreign exchange business that wanted to minimise cross-border bank transfers to settle between currencies and it looked pretty good. In general, the technology may be far more disruptive on the wholesale side of payments!

However, I don’t think observers such as those from Goldman Sachs go far enough. The potential revolution in payment technology is only one of the three ways that the financial services industry is going to adopt and exploit the bitcoin technology. The other two are the use of smart contracts and the use of value- based currencies.

The latter first. If we are going to use the

blockchain for new kinds of money, then I rather suspect that they will be new kinds of money that are based on values, perhaps linked to communities of one form or another. I can imagine the blockchain being used, for example, to create a Sharia-compliant money based on gold for Islamic markets or a money based on energy or a local and hyperlocal money or private, corporate money.

Smart contracts are an entirely new concept and may have a very radical impact on the future of electronic transactions of all kinds.

Bitcoins that are programmable, that contain scripts that can be executed under certain conditions can be used to construct intelligent transactions. As Marc Hochstein wrote in his excellent piece for American Banker on “Why Bitcoin matters for bankers”, even more imaginative potential uses of the blockchain involve the interrelated concepts of smart property, smart contracts and programmable money. I don’t think we’ve even begun to imagine what this might mean.

So I do drink the cryptocurrency kool-aid, but I About the Author

Dave Birch is one of the founding members and Directors of Consult Hyperion where he provides specialist consultancy support to clients around the world, including

all of the leading payment

brands, major telecommunications providers, governments bodies and international organisations including the OECD.

An internationally recognised expert in Digital Money and Digital Identity, Dave

has been described by The Telegraph as “one of the world’s leading experts on digital money”, by The Independent as a “grade-A geek”, and by the Centre for the Study of Financial Innovation as “one of the most user-friendly of the UK’s uber-techies”

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see the advent of cryptocurrencies that embed values that make sense to wider communities. XBT is different. It isn’t about values, it is about belief. The impact of XBT will not be a digital gold standard. It might not even be payments. The well-known venture capitalist Fred Wilson recently said that we have allowed Google and Facebook to become our de facto identity services and he predicted that a “Bitcoin- like” identity protocol will arise in the future. Interesting. In other words, for bitcoin as for everything else, identity is the new money.