I’d like to recognize the great work of Angela Lawson from the Federal Reserve Bank of Minneapolis, and Eric Biderman, Esq, of Arent Fox, whose session on Digital Currency drove my main takeaways from Day 1 of the CRF Fall Forum.
It was a beautiful day in Salt Lake City, and the energy was apparent as members and partners gathered to kick off the Credit Research Foundation’s Fall Credit & Accounts Receivable forum. The half-day kickoff was marked by two keynote sessions - the first an overview of the Digital Currency landscape, and the second a panel featuring three bankruptcy judges discussing some of the approaches and reasoning behind US Bankruptcy Court decisions. While I won’t be able to do justice (pun intended) to the intricacies of bankruptcy law discussed in the panel, I’d like to share some of the interesting points that were discussed in the earlier session on Digital Currencies.
The session opened with a straw poll around the level of effort currently being invested by attendees into investigating and evaluating the potential for digital currencies (perhaps more commonly known as cryptocurrencies). Based on a quick scan of the room, it appeared that none of the businesses represented today had started this process; hardly surprising given the uncertainty that still surrounds this topic.
The session opened with a good overview of:
- The distinction between blockchain (a foundational technology) and cryptocurrency (one of many applications of this technology)
- The differences between:
- Money: A current medium of exchange in the form of coins and banknotes; coins and banknotes collectively;
- Currency: A system of money in general use in a particular country; and
- Cryptocurrency (which lacks a consensus definition)
Takeaway 1: Cryptocurrency will disintermediate payments
When you consider the number of players involved in a simple credit card transaction (or in a more complex transaction, like sending money from a western country to a small, third world country), it is quickly apparent that time required and cost involved to execute the transaction is directly proportional to the number of players involved. Consider that cryptocurrency lays the foundation for a direct, peer to peer transaction that hypothetically could happen instantaneously, for a less than you would spend on a cup of coffee at a gas station - and now consider how that would dramatically shape the way your business collects payment. This is not the reality we face today, but it is not far from becoming a reality.
Takeaway 2: Mainstream acceptance is still a ways away
Coinbase, one of the larger cryptocurrency exchanges in the US today, brags that “over 2,000 merchants are accepting cryptocurrency today”. Considering that in the US today, there are over 1 million retail businesses, and 27 million companies - we are fair from widespread adoption of this technology.
Overall, the Day 1 sessions were a great start to the Forum, and provided a nice blend of practical advice and concepts to consider through a more forward-looking lens. Day 2 promises to bring more insights from leaders that are working through subjects like RPA, deductions, and the use of credit cards in a B2B context, and we’re excited to contribute to the conversations as they unfold!