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Friday 1 December 2023 Dublin: -2°C
The Canadian Press/Jonathan Hayward A Bitcoin ATM sticker is posted to the window of a coffee shop in downtown Vancouver.
bit by bit

So what's the next step for Bitcoin?

After what was an eventful year for Bitcoin, what needs to happen before it’s accepted as a legitimate currency?

IT’S BEEN AN eventful few months for Bitcoin. The digital currency, which wasn’t even on the public radar this time last year, has exploded in growth in the last few months.

Having reached a high point of €730 for one Bitcoin at the end of November before it began to fall. At the moment, it’s currently over the €600 mark suggesting that it’s beginning to show signs of price stability.

Now that the initial hype has died down, what’s the next step for Bitcoin? If nothing else, its growth has made people aware of the many digital currencies that exist, but knowing how the next few months or years holds for them is anyone’s guess.

Few people know where exactly it’s going to go, but there are many who are willing to experiment as it makes its way into the mainstream.

One such person is Jeremy Allaire, the CEO of Bitcoin company Circle. Opening up offices in both Boston and Dublin, Circle aims to build payment processing systems that will allow digital currencies to be traded easily, safely and without hassle. There’s no exact date for when the service will be launched, but Allaire feels this will be a big year for the currency.

“I think this year, you’ll see a lot of clarity around the rules of play around it and you’ll see more mainstream orientated projects getting launched,” said Allaire. “[Once that happens], it will hit a more rapid growth curve and I think by the following year, you see it popping up all over the place.”

imageJeremy Allaire speaking at the Dublin Web Summit in October 2013. (Image: Niall Carson/PA Wire)

Allaire and Circle see the vast potential that can be found in both Bitcoin and digital currencies. They aren’t limited by boundaries or country, it operates outside the traditional financial space and can be traded instantly and at no cost.

However, it’s those benefits that also work against it as the lack of regulation and barriers poses a serious headache for banks and other financial institutions to address. A large part of what Circle is working onis meeting with the different governments and financial institutions to help them understand what Bitcoin is and establish ground rules around it.

The logic is if these institutions are backing it, then the average person will then warm to it and begin using it. Allaire firmly believes that this backing is necessary if Bitcoin, or any digital currency, is going to succeed.

We live in a world of government issued currencies and in order to make value out of a digital currency, it needs to live in this hybrid environment where money moves between the traditional model and the new payment rails and systems.

In order to do that, Bitcoin needs to have robust interaction with existing financial networks, existing money transfer systems, and bank accounts. If you don’t have that, then it won’t have practical everyday use for mainstream users.

That framework is vital for a number of reasons. For one, it will create trust among financial institutions will help stabalise what has been a somewhat unstable market and it will allow more businesses and services to incorporate it into their payment system.

Allaire was introduced to Bitcoin more than a year and a half ago, and the more he learned about it, the more invested he became in following its progress.

“The deeper I got into it, the more excited I got and it really struck me that this was a very fundamental innovation on the internet, explains Allaire. “To me at least, it felt as significant as the birth of the web and HTTP and the protocols that made the web possible.”

(Video: DLDconference/YouTube)

It helps that Allaire’s background is in political economy. His interest in how global economic systems work gives him a unique advantage in that he’s not looking at the immediate implications, but how Bitcoin fits into the grand scheme of things.

As well as looking at how the currency is performing, he looks at how the ecosystem is evolving. Aspects like the number of startups focusing solely on Bitcoin is important to take note of as the more companies incorporating it into their services, the more opportunities you have to use it.

Right now, it’s very difficult to purchase Bitcoin in the country and despite the progress it’s made, there’s still a lot of uncertainty behind it. Its current form can only bring it so far, and if it wants to become mainstream, it needs a framework that allows it to be used by both businesses and customers safely and easily.

Something that’s both freeform and not regulated by any authority means it’s filled with uncertainty and to Allaire, that “makes people nervous.”

It’s easy to forget that while talking about the future of digital currencies, this is still a very young market – Bitcoin was only created back in 2009 – and because of that, the market is still immature. There are no guarantees that Bitcoin – or any other digital currencies – is here to stay, but despite the risk, Alliare is optimistic about the market and how it will evolve.

There is still a lot of work to be done before it becomes noticeable in our day-to-day lives, but with calls to regulate Bitcoin over here and with more financial institutions such as the Bank of America taking note of it, it’s going to be an eventful year for both it and digital currencies in general.

Read: TD wants tougher controls of online currencies such as Bitcoin >

Read: Confused by Bitcoin? This guy explains it well… >

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