At Infosys Cards and Payments, we help our clients harness the power of technology-led innovation across the entire payments ecosystem encompassing payment networks, merchant services, stored value, FI payment services, and payment aggregators. Our thought leadership and a design thinking approach helps us co-create solutions with our clients to address their business problems.

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October 28, 2015

Math based currencies - Fool's gold or future of transactions?

This week I read a bullish viewpoint on Bitcoins (alternate link) from the famous Winklevoss twins who have started a licensed and regulated bitcoin exchange company Gemini. They own significant amount of bitcoins and think this value exchange over internet will have profound impact on our lives in the long term. This interview has some interesting viewpoints - why expanding credit card/ACH networks is costly and hence not best solution for international trade, why Bitcoin is better than gold (what happens if asteroid mining becomes successful) etc. They think the only significant problem with Bitcoin adoption is regulation and hence they are trying to address it with a regulated exchange. There are other problems with Bitcoins as well - one of them being the energy inefficiency of the Bitcoin transactions. Some think in present format Bitcoin is not ready to replace the fiat economy due to its extreme energy inefficiency compared to other existing protocols (here is an Economist's version comparing gold standard or money movement). 

Napster failed to be a financially successful music distribution company (probably it was early for its time) but it opened up a Pandora's Box for innovation in this space (some successful cases would be Apple iTunes and Spotify). We may see similar history repeating in Virtual currency & Distributed Ledger space. We are still early to assess the future -these new technologies may compete and win against incumbent players or incumbent players may adopt them and make them mainstream. But one thing is certain - these disruptions will improve the efficiency of financial market, increase trust and open up new business opportunities.

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