March 22, 2015
A report was recently released by the Goldman Sachs Group, Inc. research division titled The Future of Finance: Redefining the Way We Pay in the Next Decade. The report primarily discusses the future impact of bitcoins. It highlights that bitcoins are expected to rise in popularity because the concerns around security have been addressed, thus obviating the need for security clearances.
Bitcoin technology brings in enhanced security, faster payment networks and analytics capabilities as well. Bitcoin can be acquired and used with no identification attached to them except a wallet ID. They are now poised to disrupt the payments space according to the analysis from Goldman Sachs. With over 100,000 merchants already accepting payments via Bitcoin, more are expected to adopt it in the coming years.
Bitcoin, as a currency, certainly has the potential to gain a substantial share of the $1.2 trillion global payments market, the report suggests. Bitcoin operates without transaction costs that saves merchants millions of dollars across the globe.
The report details that distributed networks are, in principle, more secure and reliable due to their open source nature, and there is no single point of failure.
Direct payments will be majorly impacted if Bitcoin goes mainstream. Mainly large merchants will benefit, while money-transfer organizations (MTOs) such as Moneygram and Western Union could incur losses as a result of this shift.
Companies will begin to perform exchanges that begin with cash for customers not interested in using a bank account. The report talks about Bitspark as a company that will do this, and could take 20% of a $30 billion market from competitors within the next 10 years. Transfer fees are also predicted to drop tremendously to 2.5%, from the current average 6%.
The Goldman Sachs report also highlights that adoption of this crypto currency is still in its infancy and that the company will keep a close eye on its usage in the near future.