A version of this post originally appeared on Re/code.
The rollercoaster ride for Bitcoin enthusiasts continued this week: There was good news from UK regulators, who have taken a relatively progressive stance on virtual currencies, and bad news with the latest heist of 890 Bitcoin (roughly $600,000) and the resulting demise of Flexcoin, a Bitcoin storage service. The breaking news frenzy perhaps reached a new peak with the claim that the real Satoshi Nakamoto has been identified. There’s no doubt that additional revelations are on the horizon when it comes to the first crypto-currency, and with that, the debate about the longevity and usefulness of Bitcoin will continue. In our new report on Bitcoin, we address the following questions:
1. What is Bitcoin?
2. Who are the main players?
3. What headway has Bitcoin made?
4. How viable is Bitcoin as a consumer payment alternative?
5. Should I worry about crypto-currencies like Bitcoin disrupting my business?
6. How can I outsmart crypto-currencies?
Here’s the bottom line: Bitcoin is deeply flawed as an alternative currency or payment method for mainstream consumers. It will, however, be a catalyst for a more efficient global payments system because it demonstrates one way to tackle the many embedded inefficiencies.
Bitcoin Is Not A Viable Payment Alternative For Mainstream Consumers
I’ve spent the past two days at Finovate Europe in London, which must be one of the more thought-provoking ways anyone in digital financial services can spend two days.
Here’s my perspective on the lessons from the event for digital financial services executives:
More people are focusing on the small business opportunity. There were far more companies proposing to help small businesses manage their finances this year, in numerous ways from access to capital through to document storage and expense management. I was particularly impressed by the work that Efigence and Idea Bank have done to help Idea Bank’s small business customers manage their finances.
Automated financial advice for mainstream customers is edging closer. For years, Forrester has talked to its clients about the huge opportunity, and pressing need, for financial firms to use software to automate the production of financial advice. A growing number of firms are trying to solve this problem from one angle or another, including Money On Toast, Vaamo, Your Wealth and Yseop. Perhaps the best quotation of the event came from Elizabeth Farabee at Yseop: “A banker doesn’t sell the customer the best product, but the product he knows best.” Automating the manufacture of advice can fix that.