As this article in Vox yesterday essentially argues, growing numbers of people are beginning to look at bitcoin a little less ambitiously and are starting to see its promise as a payments system. (I first discussed this possibility in a post about six weeks ago.) Previously, many were attracted to the virtual currency for its potential as a get-rich-quick scheme or a counterweight to government control of inflation. The sound of hopes and dreams crashing may also be the sound of a legitimate payments medium growing. Less sexy, perhaps, but potentially more useful.
Briefly, the idea is that as a pass-through payments mechanism, bitcoin avoids credit card transaction fees, exchange-rate risk, currency conversion fees, and – I would add – probably some of the UCC Article 9 problems and tax-reporting challenges presented by transacting in actual bitcoins. The way this model works is that Sally Shopkeeper quotes Bob Buyer the price of $450 for a guitar (which is about one bitcoin at current prices), and Bob uses his iPhone to either transfer Sally a single bitcoin or – even better – pay her $450 from his checking account, which is transferred to Sally in dollars, not bitcoin, via a bitcoin conversion service that charges a much smaller percentage than Visa or MasterCard.
This model of bitcoin-as-payments-system is still developing, and lacks some of the protections of transacting via credit card (and the simplicity and anonymity of cash), but it makes a lot more sense to me than the easy money or ideological models articulated to date. Quietly and without getting out of our seats, it may soon be time to hail the arrival of a more mature Bitcoin 2.0.