A case for private blockchain ecosystemsWhen will Bitcoin buy coffee?
Digital currencies work, and surprisingly better than anyone ever imagined. The question on everybody’s mind today is when will crypto-currencies go mainstream? When, for example, will I be able use my favorite crypto currency to buy my next cup of coffee at Starbucks?
The answer, in our humble opinion, is “soon”, but probably not in the way we all imagine.
After almost a year of noodling on this very issue, we’ve made a few cold hard observations:
Companies Listen to Governments
CEOs and Boards of all our favorite global franchises work very much within the boundaries of local laws (obviously). While that may seem like a dumb statement, we often forget that the starting point for any analysis of the potential mass adoption of crypto currencies is the future path of government regulation.
In order for big global businesses to start accepting crypto currencies, corporate decision makers need to see one of two things happen.
First, a major country (or state) could declare crypto “legal tender”. “Legal tender” is essentially a formal pronouncement that whoever uses crypto currencies to pay for something, cannot be refused by a merchant to sell you that product. The US dollar, for example, is legal tender. If you want to buy a product with dollars, merchants in the US cannot, by law, refuse to accept those dollars that you offer up.
As you can imagine, the whole notion of “legal tender” was conceived by governments, for governments. Dollars must be honored, and the full weight of the legal system ensures this.
So, what is the likelihood of any developed economy declaring today’s crypto coins as a form of legal tender?
I hate to say it, but probably zero.
No matter how widespread or popular crypto currencies become, it is difficult to imagine a scenario where a major developed econ...