Since revisionist history seems to be taking center stage in Washington and elsewhere, let’s take a stab at our own.

Were he alive today, Thomas Paine, one of the architects of the American Revolution and a true visionary, might have been a Bitcoin fanatic. He spent his adult life railing against the evils of paper money, sometimes equating it with vice and immorality.

Wide Adoption

The question is whether cryptocurrencies — decentralized, encrypted, peer-to-peer digital money that exists outside the realm of banks — will be adopted by the public at large. More important, will I be able to use it to buy that Brioni suit at Neiman Marcus, my latte at Starbucks—or those golf clubs on Amazon?

I classify the current generation of cryptocurrency fanatics into three groups: Those who use it to transfer funds for nefarious purchases on the dark web; people who wear Star Trek paraphernalia on casual Fridays or have carpal tunnel syndrome from hours of online gaming; and serious investors who see it as an alternative to the stock market exchanges and the future of global monetary systems.

They all have one thing in common—a belief that all currencies are nothing more than a fiction. Some take it a step further by characterizing banks (and our Federal Reserve)as criminals who print money out of thin air and are in league with the oligarchy class to pull the wool over the eyes of the “Great Unwashed”.

Funny Money?

That is a mouthful but not without some nuggets of truth. Paper money, also known as “fiat money” is only money because the a federal government says so. Some people see it getting to the point where the beloved Greenback (or its equivalent) has less value than frequent flyer miles.

Cryptocurrency is a completely different animal, and we’re still trying to determine what kind of animal it is. But proponents and detractors alike say it has the potential to be the next killer app in the financial world and yet another retail disruptor, designed to take advantage of internet architecture.

And a dollar, is a dollar is a dollar! It’s worth the same in New York as it is in L.A.—if you stay away from Rodeo Drive. But the value of cryptocurrencies can fluctuate wildly in a matter of minutes or even seconds. Does this mean it buys less, or more, minute to minute?

More Monies

Complicating the matter is that we’re not talking about a single currency. Bitcoin was the first and is the most famous. There’s also Ethereum, Litecoin, Ripple, Ethereum, Dogecoin, Dash and Monero. In fact there may be over 1,000 cryptocurrencies right now with an estimated market capitalization over $115 billion according to some observers.

Then there are the mainstream alternatives. For example, Burger King launched WhopperCoin in Russia to reward customers for each purchase of a Whopper sandwich. Maybe the fast food chain, not the U.S. elections, will be the next target of hungry Russian hackers. But an increasing number of companies also accept Bitcoin, according to Fung Global, including Subway, Expedia, Shopify and Peach Airlines, a Japan-based company that runs regional flights in the U.S.

The online messaging app KIK is planning to raise $125 million through an ICO (Initial Coin Offering) making it one of the first established companies to wade into the waters of the highly speculative digital token (re: cryptocurrency) business.

Meanwhile, the Securities and Exchange Commission is showing what’s left of its teeth, warning that some coin offerings could be deemed securities and therefore subject to regulation. In response to the wild, unregulated swings in the digital coin market, China has announced it is banning ICOs. This is ironic considering China’s penchant for currency manipulation.

But at its core, digital currency is nothing but software. The bigger problem is that there doesn’t seem to be a software platform anywhere in the world that can’t be hacked. What happens to the global currency markets, or retailers, when this happens? And it’s inevitable that it will.

Creating Currency

Then again, someone can just take the open source software to create his or her own currency.

This is already happening. Miners—companies and individuals that process Bitcoin transactions and mostly located overseas—along with investors and developers, are having a spat with Bitcoin. They have launched a competing cryptocurrency called Bitcoin Cash which claims to offer a faster verification process for transactions which could make it more attractive to merchants and other users.

However the similarities between the traditional Bitcoin and Bitcoin Cash are causing confusion among cryptocurrency exchanges and brokers.
Let’s be clear. There’s no guarantee that Bitcoin or any other cryptocurrency will survive. But I remember a time when they said the same thing about online shopping and mobile payments. Many observers even equate cryptocurrency with the infant internet in the 1990s when no one really knew whether it would survive or how it might evolve.

Secure Transactions

At this point, many are hoping that cryptocurrencies will come into widespread use in the marketplace, including retail. The method that will allow this to happen is blockchain technology. It’s meant to create a more secure ledger database that stores every transaction. And a lot of money is being pumped into determining if this can be a gamechanger for business.

Fung Global, which has done intensive research in this area, notes that the four pillars of blockchain technology are security, transparency, trust and speed. This makes it a strong vehicle for online shopping. And since blockchain involves a network of decentralized computers, it can eliminate third party payment processors, thereby lowering transaction costs.

It could also speed up transaction processing to a matter of minutes or seconds rather than days. This is a peer-to-peer system that enables currency to move between accounts without passing through a centralized banking authority and waiting for them to verify a transaction. This could make blockchains, and cryptocurrenies hack-resistant since the block is sealed and nothing in it can be changed thanks to computer generated algorithm protocols. However, this has yet to be proven commercially.

Blocking Counterfeit Goods

Blockchains are also being considered as an encrypted registry for products that could eliminate counterfeiting and fraud in high-value items like art, antiques, diamonds, which would use smart tags to authenticate products. It might not put the purveyors of counterfeit goods on Canal Street out of business but it’s a start. As Fung Global said in its recent report, “Every day, more potential uses for the technology are imagined and developed. Its use will be limited only by developers’ creativity and developmental dollars.”

However, blockchain technology could have unintended consequences for businesses gathering consumer data. MIT researchers are close to Beta testing the Enigma Project, a blockchain system that would allow people to share selected information for only a certain period of time and for selected purposes. This could take customer privacy to a new and enhanced level.

Alex Pentland, a computer science professor and project advisor noted: “You get to issue permission for a person to use the data for a specific purpose and with an end date. We’re going to start trading data more like money. You own it, you control it and you give it to people for a certain purpose and that’s it.”

No one is saying that blockchains and cryptocurrency will become the worldwide standard for transacting business. But at this point, the possibilities are endless for anyone with a working knowledge of recent history and a modicum of vision.