Bitcoin ecosystem analysis (NOV 15)

Bitcoin reporting in the mainstream is generally negative, why was there such a resistance to Bitcoin in the first place? Why are people now saying daft things like ‘I like the blockchain, but I don’t like Bitcoin‘? Why are so many articles keen to highlight downward price movement? Technology like Bitcoin threatens unsound legacy financial systems, I make the distinction between sound and unsound as the vast majority if not all legacy financial systems are riddled with fraud & corruption. Bitcoin has space for financial services in a traditional sense but the technology being open ledger does much more to expose shady business practises, when current business models rely on fraud and manipulation being baked into the cake it’s not surprising to see resistance to change. Services built on an honest system audit-able by anyone forces the beginning of the end of ‘extend and pretend’ narratives we see worldwide, this would leave insolvent banks unable to ‘kick the can down the road’ and a long overdue emergence of sound and transparent business, this sounds fanciful, but it’s actually already happening.


When price is discussed 9 times out of 10 it’s regarding the fall from peaks, and not the long term upward trend.

Not everyone is blind to these changes with a number jurisdictions led by the Isle of Man clamouring to be Bitcoin friendly, on the flip side of the fiat coin it comes as no surprise that for years it’s been so difficult to conduct Bitcoin business with mainstream banks in the United Kingdom (many think London is the financial fraud capital of the world) exchanges like Intersango came and went due to the banking sector shutting them down, what we’re left with in the UK now is ‘exchanges’ that are glorified brokers, and on top of that some banks shutting down accounts at will if you have the ‘audacity’ to use them, you can read a worldwide list here.

Trade & Investment evolution.


Image flickr – petrick

Let’s start with the first major evolution already in play, the stock market, you may baulk but as I said at the beginning of the article these things are already happening. Reggie Middletons’ Veritaseum completely disrupts and dis-intermediates traditional market tools allowing anyone to use his software to trade on a staggering number of indexes and commodities, this is software you can go and download right now, better still a web driven version is in the works.


Whilst the default view is the Dollar make no mistake BitCoin is the backbone, you can trade pretty much anything against anything with Veritaseum.

The potential of this tool is outrageous, it offers up to 10,000x leverage on over 45,000 tickers whilst using the Bitcoin network. Many won’t have heard of Veritaseum before and with good reason, software like this is a complete tankbuster bankbuster, so it’s no surprise the media aren’t crowing about it, it’s all a matter of time though until the cat comes leaping out of the bag on a grand scale.

Traditional methods of investment are also being revamped using Bitcoin technology, Bank to the future are already allowing investment on a wide variety of pitches using Bitcoin (and traditional currency) most impressive are the daily Bitcoin dividend payouts, the cost effective nature allowing dividend payouts on a much more regular basis than traditional models.


bank to the future are already paying Bitcoin daily dividends on some investments.

Moving money & wallet diversity.


Think features not fashion.

As BitCoin evolves so do the methods for holding them, a rapidly evolving number of products and options exist, cold storage by storing your Bitcoin offline, specific hardware vaults like Trezor, paper wallets, brain wallets, as well as a host of new regular wallets being released, regular wallets all have ways of sending Bitcoin of course, but none make it as simple as StartChat


Pretty much anyone with a modern smartphone can pick this up and go.

StartChat (available to download from the Android store) has baked in familiarity, it’s an encrypted decentralised chat client with integrated Bitcoin and StartCOIN send and receive features, the simplicity is the selling point and highlights just how quick and simple it can be to send currency person to person.

Content and services micro-payment evolution.

Lack of ease and fees are a burden for small transactions, this is where Bitcoin can make a big difference for transactions via the web. A tip jar becomes less appealing if you need to sign up and sign in to external services (you can just publish a Bitcoin address via text or QR code) The same goes for small transactions, this is where gourl comes in, it’s a powerful plugin for many of the biggest site/blogs such as wordpress, plus the open source nature means if you don’t like something about it, you’re free to make any modifications you want.

Have something you want to sell or monetise and want to give it a try? here’s a guide they put together allowing you to open your own webshop in 10 minutes

So what about legacy banking?


No it’s not time for this yet… (Image credit Mike Poresky

So does this all signify the end of banking? Probably not, as we know it? Maybe, there will always be a need for honest financial services.

Many write of a future without banks, whilst this is possible some kind of financial service will remain, we see banks scrambling to create their private blockchains, why? Because if they don’t own the blockchain they lift right out of the equation, we’ve seen this dis-intermediation in so many other sectors ironically often catalysed by the finance industry, is it possible to replace the whole sector with a combination of smart contracts, peer to peer lending and future technology? Probably.

Bitpay is an interesting case, and probably the closest comparison to a traditional bank, in theory you don’t have to use them to handle your money, they charge a fee, but they offer peace of mind and convenience, if they messed up or you didn’t agree with their business practise you’re free to go elsewhere, this forces the onus on Bitpay or indeed any future Bitcoin financial services to perform for you.

When you think about it this is how things should work in legacy systems, I believe we will see more of this competitiveness in the Bitcoin sector, with the freedom to do it yourself the message is quite clear, if you’re going to provide a service and charge for it you better be worth it!

Bitcoin services already well ahead in the race to zero.

By KRoock74 (Own work) [CC BY-SA 3.0 (], via Wikimedia Commons

By KRoock74 (Own work) [CC BY-SA 3.0 (], via Wikimedia Commons

When we look at legacy finance systems much of the money is made by just putting up a toll booth with no value added, just look at ‘Vasa’ and ‘Moose-tercard’ I’ve already noticed that there’s some effort to emulate this in the Bitcoin space, in the short term some money perhaps will be made but the reality is it’s damaging to the Bitcoin ecosystem and will be lifted right out as soon as someone takes the time to replace the service charging with one for free.

Many people dismiss Bitcoins chances in the medium to long-term, if it’s cheaper to use than everything else then it has a good chance of success, whilst over in the legacy world we have guaranteed loss now ZIRP and NIRP take hold of legacy systems globally, it’s entirely possible that despite volatility Bitcoin could offer a better store of value than traditional fiat, essentially fiat is engineering its own fate with the push into negative interest rates. When your savings are wiped out yet certain businesses and people are being paid to borrow money (this is already happening) how long will it take for people to wake up from this nightmare?

The outlook for Bitcoin services is pretty clear, unless you’re offering a genuine service worth paying for you’re going to be dis-intermediated by something that does the same for free. When I envisaged Backbit (see the rest of the site) I quickly realised there’s simply no point in trying to charge for it as it’s inevitable it will be provided free, and the short term potential profit is damaging to the ecosystem in the medium/long-term.

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