A Little Bit of Money

A Little Bit of Money

Thought Experiments on Cross-Border Payments - Of Couriers, Bankers, and Bitcoiners

Series 1: Innocent Until Proven Guilty

A Little «Bit» of Money in My Life

I am a regular guy who spends a little bit of money now and then, just like anyone. Most of the time it is paper money, plastic, or electronic funds depending on the momentary need and purpose in my daily life. Other than that, I’m an idealist and in love with technology, and that’s why I am passionate about using cryptographic cash whenever it makes sense in today’s digital world. Professionally, I truly find it extremely attractive how elegantly Bitcoin moves across borders.

Cryptocurrency Must Be Something Evil

How money circulates has been unknown to me during most of my life. It’s comforting to know that even most bankers have no clue what happens when they click the button for a wire transfer. Needless to say, the vast majority of people have no idea what digital money is. At best, they regard crypto-currency as something invented by a bunch of nerdy programmers. At worst, they find it evil and much more dangerous than a malicious computer virus wreaking global havoc. Without a doubt, since the publication of Satoshi Nakamoto’s white paper in 2008, Bitcoin has earned a bad image in mainstream media. No wonder regular people, not to mention financial regulators, are overly suspicious.

Groundbreaking Times in Moving Money

It is breathtaking to watch what is happening in the world of digital cash. Digital natives in literally every metropolitan area around the globe are challenging the financial establishment. For the most part, the high society of finance is stuck stereotyping Bitcoin, as bankers are poised to ignore the dawn of a new era in cross-border payments. Why change, since the traditional model of capital flow still works? Well, times change. Today, the key demographics of the Bitcoin community – a mix of consumers, libertarian technologists, traders, and alternative businesses - care more about the nature of money than bankers, and I'm enthusiastic to join the chorus. Let’s distinguish between different use cases for Bitcoin and follow the principle of “innocent until proven guilty.”

Evolution from Messengers, Wires, and Cards to Bitcoin

To understand the mechanisms behind how money travels, I'll start with the legacy of banking systems, together with the card payment industry’s business model. From there, I'll share insights into the game-changing properties of Bitcoin. In addition to dissecting the technological and economic aspects of Bitcoin, I will also touch on the cultural and historical aspects of digital money. Furthermore, I'll highlight pressing regulatory issues relating to’s impact on the banking system and its monetary framework. The goal of this analysis is to highlight the myriad ideological views and political perspectives concerning a coming era of global currency with less governmental debasement. In my professional opinion, there is no doubt about the usefulness of Bitcoin technology, as the future will be about moving money in the blink of an eye with a store of value that cannot be easily manipulated for political purposes.

To be continued. Further Reading:

S. Nakamoto. “Bitcoin: A Peer-to-Peer Electronic Cash System.” 2008.

http://bitcoin.org/bitcoin.pdf

W. Dai. “B-money”, weidai.com/bmoney.txt, 1998.

“How Does Bitcoin Work?” The Economist. April 11, 2013.

“How Blockchains Could Change the World.” McKinsey & Company. Interview, May 2016.

http://www.mckinsey.com/industries/high-tech/our-insights/how-blockchains-could-change-the-world

Custodio, Nik. “Still Don’t Get Bitcoin? Here’s an Explanation even a Five-Year-Old Will Understand.” 9 January 2014.

http://www.coindesk.com/bitcoin-explained-five-year-old/

About the author: Bernhard Kaufmann is the R&D Compliance Officer at Moving Media GmbH, a Swiss-based financial intermediary operating Payment21®. The gateway is specialized in processing AML-compliant digital money transactions for regulated industries.

The author uses the nickname "Benscha" to publish this series of articles on cryptocurrency. The meaning of Benscha is easily explained. In the Middle Ages the counters of Italian grain merchants were in fact the original "banks". "Banca" is the Italian word for "bench". Consequently, Benscha is a variation of bench. The merchant's "benches" in the great grain markets became centers for holding money against a bill of exchange, which later became known as a check. Originally developed to finance long trading journeys, the payment methods of the merchants were later utilized to fund the production of commodities.

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