There is a very public war being waged between Apple, Google, Samsung, Amazon and several banks, with the weapons of choice being their respective mobile wallets.
And for a good reason – whoever controls the payment user experience will own the customer.
The person who uses Apple Pay doesn’t really care if they are actually using a credit card from Bank A or Bank B. In fact, they could switch banks with no friction, as their payment experience would not change.
So, the underlying financial technology has become a commodity and the wallet provider not only keeps a piece of that transaction, but they can also start offering functionalities that were previously exclusive to the banks.
Which way forward?
Bitcoin has two options here: to become yet another underlying payment routing system for these wallets to use, or to compete with them and seek to control the end-to-end experience.
Don’t get me wrong – both strategies would produce huge growth for bitcoin. Being able to fund your Apple or Google wallet with bitcoin would probably be a boon for mass user adoption.
And, in countries with significant unbanked populations, it could provide a good solution to let companies working in payments to do what they do best and focus on routing transactions.
Bitcoin could even offer several advantages compared with other banking or payment service providers. For example, smart contracts could be set up to make that money usable only in certain places, or to be able to buy certain products – ‘programmable money’, as some people call it.
On the other hand, giving up on the user experience would limit the possible capabilities to those people most likely to use a digital wallet.
Furthermore, while centralizing wallets in these big companies would make things easy for the regulators, they would definitely slow down adoption on some of the most attractive features of bitcoin: borderless and instant payments.
Laying the groundwork
You must be thinking: why not do both? In fact, that is the current path we appear to be on today. Some people are working on bitcoin as a value routing system, while others are building wallets and other services on top of the network.
Yet there are some key architectural decisions that need to be made sooner or later if bitcoin is to scale, and being very clear on what we want to achieve would give the necessary visibility for others to know where to invest.
It’s an open-source project, I know, but don’t tell me that there isn’t a group of people who are more influential to the project than others.
Focusing is key to any project/startup, and that shouldn’t be different for bitcoin. The guys who built TCP/IP were building TCP/IP. They didn’t do it with next Monday’s newspaper in hand thinking of WWW, VOIP, FTP, SMTP and so on.
That doesn’t mean not thinking ahead on scalability issues, but working on a solid protocol and letting others build upon it. The difference here is whether to develop the platform for the next Visa competitor, or to work on the foundations and let someone else make the credit card business obsolete by running their product on a state-of-the-art bitcoin blockchain.
Maintaining focus
I haven’t really made up my mind yet which is the best path we should follow as a community. There are lots of pros and cons to consider, but I do know that a lack of focus gives competitors the space they need to keep building a network effect and to catch up with the functionalities of bitcoin that your average Joe would find appealing.
Not everyone is in bitcoin for political reasons, but for the efficiencies that the technology can bring to people in their financial transactions.
If someone else brings those efficiencies in first, it will be twice as hard to convince users to come over to bitcoin.