Bitcoin, whose credibility took a hit with the spectacular collapse of its largest exchange, Mt.Gox, in February, may not dominate the world as a virtual currency in 25 years, but the idea of digitized money may. And the reason is as old as capitalism itself: lower costs.
"The really interesting story in money is its digitization, and the huge amount of friction that exists in the system, and the way that technology destroys all those costs," said Boris Schlossberg, managing director of FX Strategy at BK Asset Management.
From a purely technological perspective, the ability to pay anyone instantly in any currency exists already, with minimal or even no transaction costs. Banks are resistant to such a no-fee money marketplace, because they now profit by acting as intermediaries for transactions. In the coming years, however, "insurgents" will make those transactions easier and cheaper, Schlossberg said.
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Facebook, for example, could facilitate user-to-user payments for less money than a bank charges, Schlossberg said. He spoke to CNBC four days before a report in the Financial Times said that Facebook plans to do that very thing by making it possible for people to send payments and store money via its social network.
A Facebook spokesperson whom CNBC asked about the report said that the company "declines to comment on rumors and speculation."
Schlossberg also pointed to Xoom, which lets consumers make payments internationally, and Square, which makes it possible to take payments through handheld devices, as other firms on the forefront of digitized transactions.