There have been many reports of bitcoin's demise, but the fate of one currency doesn't eliminate the many use cases that virtual currency could still address in payments, according to Evan Duffield, a Phoenix-based developer and founder of the virtual currency Dash.
"The Bitcoin network is only five or six years old and in that time went from a value of zero to $6 billion," said Duffield, whose company is planning a major push into person to person transfers. "You're going to have some selling of the currency now just for profits. It's a natural occurrence in markets."
Bitcoin developer
His pronouncement has drawn considerable attention, enough for Hearn to follow up with a new blog post to debunk "
Most banks have been reluctant to support virtual currency for transactions, but are interested in using the underlying blockchain technology to speed tasks such as clearing or lowering costs for international transactions. Enough non-bitcoin interest in blockchain technology has emerged in the financial community to give rise to outsourced options.
Despite these developments, virtual currency is not "
"I would say the correction in the bitcoin market is temporary and we've only seen the beginning of the actual market taking form," Duffield said.
Dash, which currently has a value of about $4 per coin and a $25 million market cap—similar to bitcoin in 2011—has a different model, though its well-being is indirectly tied to bitcoin given the latter's position as the most well-known virtual currency.
Dash offers instant confirmation for transactions, versus the 10 minutes for bitcoin, which makes Dash a practical option for low-value P2P transactions. While there's no formal transaction limit, Duffield said online shopping purchases or "PayPal-style" P2P transfers are Dash's sweet spot.
"Our customers can be anyone on the Internet or anyone that would benefit from an instant transaction," he said. "It could be someone who sells on the Internet, or anyone that offers credit card payments whose business would benefit from offering lower fees."
The backbone of these payments is Dash-Evolution, which Duffield is demonstrating this week and is expected to deploy fully in the market over the next year.
The payments experience for Dash-Evolution, which is a virtual currency alternative to P2P systems such as PayPal's Venmo or the bank-led clearXchange network, is like a combination of a social network and an email program. Users create an account that's accessible from any device, and invite friends to make and receive payments by username. Users can also track payments and share payment descriptions with payees.
Merchants add Dash payments to their apps using common Web standards. The network is designed to lower costs by avoiding centralized processors and third parties, Duffield said.
"You make a payment just by typing your friend's name in an address bar. All of the usernames and passwords have been removed," Duffield said.
Security is provided by the user accounts, which are secured by the user's access to the blockchain, Duffield said.
In a private blog post, Mercator said the collapse of bitcoin isn’t imminent as the value of bitcoin is market-based and many of those that hold bitcoin are unaware of its inner workings. Based on this it is likely bitcoin will stagger on as the core developers and the community argues over what next steps should be taken, Mercator states.
P2P virtual currency transactions may struggle to find footing, according to Tim Sloane, vice president of payments innovation at Mercator.
"It is not the use case that will move cryptocurrencies forward, although the platform must be pliant to support multiple use cases," Sloane said. "The problem is deploying into the wild a platform that established trust between all participants through a machine enabled ecosystem that includes a mechanism for bringing businesses and consumers onto the platform. The critical weakness of bitcoin, in my opinion, is that the on and off ramps are not part of the bitcoin platform unless you were a 'miner' (people who add transaction records to the blockchain). Wallets, exchanges, etc. all fall outside of the bitcoin trusted platform."
