Top Bananas

What it is: Bitcoin has grabbed all the news recently as the number one cryptocurrency, but be careful of first-generation products.

Bitcoin helped define the cryptocurrency market with its blockchain technology. The biggest problem with Bitcoin is that it’s a first-generation product. There’s nothing wrong with a first-generation product except that others can offer improvements that will eventually eclipse the features of the first-generation product.

In the computer world, WordStar, dBASE II, and VisiCalc were the first generation products of their time. They worked just fine until rivals came along that offered features that these products did not. These first-generation products simply defined their markets but rivals had the opportunity to design new features that first-generation products had trouble duplicating.

VisiCalc was the first spreadsheet in the world, but Lotus 1-2-3 came along and offered integrated graphics. VisiCalc could do graphics with add-ons, but Lotus 1-2-3 proved better so people gradually shifted from VisiCalc to Lotus 1-2-3. When Windows arrived, people shifted from Lotus 1-2-3 to Microsoft Excel to take advantage of the Windows environment.

VisiCalc could have kept bolting on features like graphics and Windows compatibility, but it was so much easier for rivals like Microsoft Excel and Lotus 1-2-3 to simply start from scratch and create an optimal solution instead.

WordStar dominated the word processing market until WordPerfect took it over. Then people shifted from WordPerfect to Microsoft Word. Now nobody seriously considers WordStar or WordPerfect any more although both still work just fine. WordPerfect for Windows is just as capable as Microsoft Word, but everyone shifted to Microsoft Word and never had a reason to switch back to WordPerfect for Windows.

In the cryptocurrency world, Bitcoin defined blockchain technology, but because it’s a first generation product, limitations are appearing. Bitcoin’s technology is slow to process transactions so rivals are offering faster ways to process transactions. In the meantime, Bitcoin is stuck with its first-generation solution. Eventually, rivals will offer dramatically enhanced performance compared to Bitcoin for processing transactions, and when that happens, that will be the end of Bitcoin.

Since Bitcoin’s code is open source, some people have forked Bitcoin to create alternatives like Bitcoin Cash. Since these still rely on the original Bitcoin code with all its inherent defects, these Bitcoin rivals are doomed to fail eventually just like Bitcoin.

The real future in any market is to ride the first-generation product as long as possible and switch when people shift to a newer product. Bitcoin’s the early leader, but rival cryptocurrencies are offering improvements that build on Bitcoin’s base, but with the benefit of hindsight to build a better cryptocurrency. These small improvements will only continue until the improvement is so large that there will no longer be a reason to stick with Bitcoin any more.

The time may not be now, but it will happen eventually. Bitcoin simply cannot keep up because it’s tied to its first-generation code while rivals can start from scratch and optimize their cryptocurrency to overcome all the flaws of Bitcoin. Given a choice between Bitcoin or a rival cryptocurrency that offers advantages that Bitcoin can’t offer with none of the disadvantages, why would anyone choose Bitcoin any more?

Bitcoin is a trailblazer but trailblazers eventually run out of steam and get overtaken by newer, faster, more optimized rivals. It happens in every field and it’s likely to happen in cryptocurrency as well. The only question is when.

What it is: Apple Pay Cash is moving Apple towards the world of digital and cryptocurrencies.

The latest version of iOS 11.2 introduces Apple Pay Cash, which allows people to send money from their Apple Pay account to other iPhone users using iMessage. If you link your Apple Pay account to a debit card, there’s no charge to send money digitally, but if you link your Apple Pay account to a credit card, the credit card will charge their normal 3% transaction fee.

Apple Pay Cash links to credit card or debit cards so in the United States, that means transferring US dollars. However, what if you could link cryptocurrencies like Bitcoin to a debit card? Then you would be able to transfer cryptocurrencies to others using an iPhone.

Apple already supports apps for letting you transfer cryptocurrencies so there’s little to stop them from allowing anyone to link cryptocurrencies to an Apple Pay account. Now that you can pay for purchases using Apple Pay, you can digitally transfer money to another iPhone user in seconds using national currencies or cryptocurrencies. That person can then spend that money in any place that accepts Apple Pay and the particular currency the user wants to spend.

Cryptocurrencies and digital services like Apple Pay Cash essentially eliminate the need to carry cash, which credit cards have already been doing for most people anyway. Apple Pay Cash simply gives people another way to spend money, all with the blessing of the current banking structure since they partner with credit card companies and credit card companies partner with Apple Pay. In this way, Apple Pay Cash helps seed the future of paying digitally with any currency you wish to use.

Cash can be stolen, but it does offer anonymity and privacy (along with the ability to hide a record of what someone else may have paid you). Apple Pay Cash tracks the money so it’s easy to follow its movement so that eliminates the anonymity advantage of cryptocurrencies, but that may not matter to many people who just want the convenience of sending and spending money on their iPhone or Apple Watch.

As more people get comfortable using Apple Pay for purchases and sending cash to others using Apple Pay Cash, this will simply help further promote Apple products that support Apple Pay such as the Macintosh, iPhone, iPad, and Apple Watch. The key to sending and receiving money digitally revolves around security, and Apple offers TouchID for fingerprint recognition and now FaceID for facial recognition.

Right now to use Apple Pay on a Macintosh, you have to use the iPhone, but in the future, expect security measures like fingerprint and facial recognition to offer an additional layer of security to using a Macintosh. Whatever happens in the future, the obvious fact is that people are not going to go back to carrying wads of cash any more. Credit cards are morphing into smartphones and wearable computers like the Apple Watch. Cryptocurrencies are going to appear but it doesn’t matter which ones dominate because they’re all going to need the security and widespread user base of iOS.

The future of money is right in your hands.

Tag Archives: cryptocurrency

Beware of First-Generation Products

Apple and Cryptocurrency