Alternative Currencies: Is There Staying Power?
“Distrust of government-issued currencies, or competitive threats involving businesses, for years has prompted the occasional alternative currency to emerge, but few have had much staying power."
Alternative currencies typically evolve when threats or economic problems occur and stabilization efforts are perceived as necessary. Few, however, have staying power. A review of various alternative currencies (operating either only in the U.S. or globally) suggests traditional payments industry players should monitor the initiatives’ progress but not necessarily shift their strategic direction in response.
Mercator Advisory Group’s new report, Alternative Currencies: Is There Staying Power?, identifies four types of virtual currencies with the potential to circumvent traditional payment methods or complement them:
- Open, online currencies, such as Bitcoin
- Closed, proprietary virtual currencies, often tied to online games
- Loyalty and reward points and miles tied to traditional payment cards
- Community-based paper currencies
“Distrust of government-issued currencies, or competitive threats involving businesses, for years has prompted the occasional alternative currency to emerge, but few have had much staying power,” says Jeffrey Green, director of Mercator Advisory Group’s Emerging Technologies Advisory Service and author of the report.
“Fears tend to subside once the situation stabilizes and conditions improve. But alternative currencies that complement and reward traditional payment card use have found a niche that will keep them prospering for years to come.”
Highlights of the report include:
- An overview of Bitcoin and its potential to disrupt the global online marketplace
- A look at Amazon’s new Coins virtual currency and whether it fits with market trends
- An analysis of the potential threat or opportunity of examined alternative currencies for traditional card issuers and networks
This report is 24 pages along with five exhibits
Companies mentioned in the report include: Amazon, American Airlines, American Express, Andreessen Horwitz, BerkShares Inc., Bitcoin 7, Bitcoin Foundation, Bitfloor, Bitmarket.eu, BitPay, Bitomat, Btcex.com, Btetree, Capital One, Carlson Companies, CNBC, Coinbase, CoinLab, Coinsetter, Delta, Discover, Dwolla, eBay, Expensify, Facebook, frequentflier.com, Gyft, JPMorgan Chase & Co., Microsoft, mileblaster.com, MoneyGram, Mt. Gox, Mutum Sigillum, OpenCoin, PayPal, PPCoin, Points.com, Redditt, Ripple, Robocoin, Royal Canadian Mint, Ruxum, Silk Road, Skype, Target, TradeHill, traxo.com, Twitter, Union Square Ventures, Vircurex, Webflyer.com, Wells Fargo, Western Union, WordPress, and World Bitcoin Exchange.
Members of Mercator Advisory Group’s Emerging Technologies Advisory Service have access to this report as well as the upcoming research for the year ahead, presentations, analyst access and other membership benefits.
About Mercator Advisory Group
Mercator Advisory Group is the leading, independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the world's largest payment issuers, acquirers, processors, merchants and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal PaymentsJournal.com.
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