Digital Disruptor How Bitcoin Is Driving Digital .

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Consumer Intelligence emDigital DisruptorHow Bitcoin is DrivingDigital Innovation inEntertainment, Mediaand Communications(EMC)Feb. 7, 2014PwC#DigitalDisruptor

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C4 key points on BitcoinA Bitcoin is a peer-to-peer currency that is gainingmomentum in multiple marketplaces. New and emergingcompanies are Bitcoin-centric and a handful of larger,established companies are experimenting with it. While it’sone of 70 digital currencies available, Bitcoin is generatingconsiderable buzz and activity, even though it is not agovernment-backed currency or legal tender in the UnitedStates. So what should executives know about Bitcoin and itspotential impact? Our point of view:1. Bitcoin can be part of an innovation strategy forproducts, services and payment systems. Someentertainment companies are experimenting usingBitcoin for new music downloads.Risks and benefits forcompanies, consumersBenefits for companies Low transaction fees Daily cash outs No payment reversals Merchant tools exist to simplifyexperienceRisks for companies Pseudo-anonymous transactions No central entity backing it Not legal tender in some countries Uncertain and evolving2. Early adopters enjoy a public relations and marketingadvantage. Being noted as a Bitcoin innovator canpotentially generate favorable press and social mediamentions. In 2014, social gaming company Zyngaadded Bitcoin to its most popular games and garneredthousands of media mentions.3. The value of Bitcoin is frequently fluid and rollerperspectives of regulators Network security Volatile trading market Dynamic product pricing a must Slow transaction processing timeBenefits for consumers coaster-like. Dynamic pricing of products is neededwith daily cash-outs and a trusted payment partner. Inthe tourism sector, CheapAir.com has partnered withBitcoin merchants to leverage those features.globally Pseudo-anonymous transactions Value fluctuations (when rising) Financial institutions don’t controlcurrency4. Like other consumer-facing technologies, companiesexperimenting with Bitcoin should monitor the evolvingregulatory landscape and execute due diligence tomitigate potential exposure to illicit activities.This PwC Consumer Intelligence Series report exploresthe emerging impact of Bitcoin on entertainment, media andcommunications companies. It is based on our analysis ofBitcoin’s 3.4 million online mentions in 2013 plus a PwCcommissioned online consumer survey to gather awareness,attitudes and behaviors about Bitcoin.Typically no fees to send BitcoinRisks for consumers No payment reversals Complexity of buying Bitcoin Complexity of cashing out Niche adoption by major brands Complexity of carrying a digitalwallet Uncertain and evolvingperspectives of regulators1C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M CBitcoin’s evolution into a brandIf it seemed like a lot ofpeople were suddenly talkingabout Bitcoin in 2013, that’sbecause they were. Bitcoin had3.4 million online mentions in2013, according to our research,equaling General Motors and allof its brands during the year.1Those conversations translatedto media mentions, too; Bitcoinwas the subject of some 11,200traditional media stories in2013.2 In November alone, itwas featured in 14,179 onlinestories.3Bitcoin’s growth has beenswift: Two leading U.S. bankshave met to discuss Bitcoin; oneof them became the first U.S.institution to initiate officialanalyst coverage of the digitalcurrency.4Bitcoin’s growth hasspawned a rash of supportingcompanies, including exchangessuch as Mt. Gox and Cryptsy,which allow users to exchangeBitcoin into local currencies.There are startups for buyingBitcoin, such as CoinBase,which received 25 million inventure capital in 2013,5 as wellas Coinmkt and Campbx. Othercompanies are creating digitalwallets to store and use Bitcoinat brick and mortar locations.All of this growth signalsthat Bitcoin has grown intoa brand, a decentralized oneat that, supported by a digitalecosystem of entrepreneurship.The history of digital shows thatwhen that ecosystems form,disruption follows.D A T A PO I N T SBitcoin in social media3,400,000Number of social mentions ‘Bitcoin’generated in 2013. Mentions occurredon social networks, microblogs, forums,mainstream news, images, videos and blogs.96% malePercentage of gender mentioning Bitcoin.The majority of discussions happen in theUnited States and China, and participantsare typically ages 26-50.21%Percentage of Bitcoin mentions about onlinegambling and video games.2013: The year of BitcoinSource: Online mention data via Sysomos MAP,201370%60%800kMayTreasury crackdown on moneylaundering. Presidentialcandidate accepting Bitcoindonations.600k700kNeutral50%AprilChinese e-commercemarket says it will culation of newunregulated virtualcurrency and value.OctoberSilk Road controversy. BitcoinATMs in Canada. Exchangelaunched in the United Kingdom.300kVolume of mentionsSentimentNovemberBitcoin Black Friday/CyberMonday: 400 retailers joinBitcoin Black Friday website. Bitcoin nears value ofounce of gold.200kNegative100k0%0Dec ‘12JFMAMJJASOND ‘13Source: Online mention data via Sysomos MAP, 2013.Note: While regulators have publicly stated they do not wish to stifle innovation, federal agencies continue to advance their own understanding of Bitcoin and itstechnology. It is likely that the regulatory environment for users, miners and exchangers will evolve over time. Companies considering Bitcoin should monitor regulatorydevelopments and how they shape the market in coming years.2C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M CThe open-source monetary systemWhile Bitcoin quicklybecomes part of the businessvernacular, does it have whatit takes for enterprise-levelsecurity?Since its release in 2009,Bitcoin has differentiated itselfby solving for the naggingproblem of double-spending,when one token is spenttwice. The solution: A publicledger that logs every Bitcointransaction, allowing users toagree on who owns how manyBitcoins at any time. Bitcoinhas also seemingly solved forissues around online systemsecurity, too; each transactionis encrypted while all of itsgoverning code is publiclyaccessible. Hundreds ofdevelopers voluntarily updateand monitor the open-sourcecode, contributing to itscommon good.As a digital currency,Bitcoin is not backed by physicalcommodities such as gold,or a centralized governmentauthority and its credit;instead, it relies on peer-topeer distribution and trust inthat network, which is nearlyfrictionless. That makes for alow-to-no fee system.With 1,000 brick-andmortar businesses and 10,000plus online merchants acceptingBitcoin, early adopters arecreating roadmaps for theenterprise to understand andadopt the digital currency.6The value of Bitcoin vs. gold 1,800Gold / ODecember 11, 2013(values in USD):Gold: 1,266.25Bitcoin: 1,237.95z. highAvg. Gold / oz. 1,2002009:The first transaction usingBitcoin occurs.2010:The tech news site Slashdotcovers Bitcoin.2011:One Bitcoin is valued atroughly 10.2012:The Bitcoin Foundation isformed.2013At U.S. Senate hearings,Department of Justice calls Bitcoina “legal means of exchange.”2014:Overstock.com has 840 orderson first day of taking Bitcoin. Thecompany estimates 500,000worth of Bitcoin business sinceJanuary 9. 800Avg. Bitcoin 600 2002008:Bitcoin.org is registered.2013:Canada and Slovakia introduceBitcoin ATMs. 1,000 400A brief history of Bitcoin2012First Bitcoin exchangelicensed as a bank in EU. 1,600 1,400D A T A PO I N T S0%J 2013B itcFoin H igM2014:Kings become first NBA team toannounce Bitcoin acceptance.hAMJJASOSource: The Wall Street Journal, “Bitcoin Vs Gold: A Tale Of Two Manias,” 2013.ND2014:Canada and the Bank of Francesay Bitcoin isn’t legal tender.Source: PwC Research, 2014.3C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M CBitcoin: Digital payment disruptorBitcoin’s value propositionincludes global, peer-topeer money transfers, nearlyanonymous payments, lowtransfer fees and higher-levelsecurity protocols based onopen standards.Four types of organizationsface increased challenges ifBitcoin continues its growthpattern as a digital currency:Banks, governments, paymentprocessors and paymentgateways.BitPay and BIPS arepayment gateways for Bitcointransactions, and they arecreating merchant tools thatenable online businesses toaccept Bitcoin on hosted checkout pages, shopping carts andpoint of sale systems for brickand mortar stores. The upshot:transaction fees are typicallylow. Some Bitcoin merchanttools offer recurring billing andfees of 1% or less to cash outBitcoin daily (see column onright).Bitcoin enables companiesto skip the “middle man” ofcentral financial institutionsand their fees, not unlikehow peer-to-peer file sharingof music enabled today’sconsumers to download musicfrom artists directly. Bitcoin is abit like the 1999-era of Napsterin that way, but today’s scenarioinvolves consumers sendingdigital payments directly toother users, or companies withgoods and services to sell, withminimal fees and no float time.Added to this propositionis that consumers who use adecentralized, peer-to-peerpayment system can be shieldedfrom fluctuations caused bylocal government politics andtheir influence on central banks.In this potential scenario,Bitcoin has the potential todisrupt currency models.Bitcoin may cause financialinstitutions to update or addto their current technologies,adjust fee structures, addservices or new layers ofspecalists to monitor andunderstand governmentalregulatory issues.D A T A PO I N T SBitcoin fees vs. other feesPayment method transaction fees, fromhighest to lowest:3.1%American Express2.7%*Visa, MasterCard,Discover2.9%PayPal2.75%SquareFree **CoinbaseFree *** BitPay66% of all point-of-sales transactionsthat are done with credit, debit, orgift cards. 6.9 trillionVISA 2013 users’ total dollar volume. Visahad the largest marketshare of all creditcards.26.2 billionTotal number of credit card transactions inthe U.S. in 2012.55,000U.S. Government viewpoints on BitcoinGovernment entityView on BitcoinSecurities and ExchangeCommissionConsidering options on Bitcoin as a security.Commodities Future TradingCommissionConsidering options on Bitcoin as a commodity, or a“marketable good produced to satisfy wants or needs.”Internal Revenue ServiceConsidering options on Bitcoin as a taxable currency.TreasuryCompanies deemed to exchange Bitcoin for traditionalfiat currencies and vice versa as a business mustregister as money transfer businesses.CongressConsidering the effect of Bitcoin on the Federal Reserveand weighing consumer protection options.Average number of Bitcoin transactionsevery day in 2013. Daily average was lessthan 100 in 2009.* Variable as set by the acquiror (bank).** No fee for first 1 million in payment processing.After that, 1% charge.*** No transaction fee with 30 / month subscription.Sources: Kimbia.com Interview, 2013.Congressional Research Service, “Bitcoin: Q Aand Analysis of Legal Issues,” 2013. NerdWallet.com, 2011. BlockChain.info, 2013. CreditCards.com, 2013.Source: Congressional Research Service, “Bitcoin: Q A and Analysis of Legal Issues,” 2013.4C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M CBitcoin growth and trust issuesSuccessful traditionalcurrencies typically have twosuccess factors: They functionas a medium of exchange andmaintain their value over time.To maintain value, acurrency must be trusted bythose using it. A medium ofexchange means a currencyhas to be divisible, easilytransferable and valued.While Bitcoin is divisibleand has an increasing numberof way to spend it, includingacceptance at online retailerssuch as Overstock.com, its valueswung wildly in 2013.7 The valueof one Bitcoin was relativelystable in 2011-12, averaging 5.44 and 8.29, respectively;2013 was a rocket ship ride,reaching a high at one point of 1,147; it ended the year at 757(all prices are in US dollars).8Much like its fiatcounterparts, Bitcoin’s valuefluctuates on the market forcesof supply and demand. However,as the currency becomes moremainstream and more Bitcoinsare “mined,” its value will bebased on actual transactions,not market speculation. Thatsaid, the same market forcescausing fluctuations in valueare also what’s driving thepopularity, and trust, in thebrand of Bitcoin.Another advantage ofBitcoin over traditional currencyis the aforementioned publicledger. Called the “block chain,”it tracks every transaction in theBitcoin network. Transactionsare semi-anonymous andultimately traceable.Bitcoin has many hurdlesbefore it becomes mainstream,including an infrastructure ofconsumer-friendly services,regulatory hurdles, licensingregimes, governmentalclassification of the asset(commodity, security, asset orcurrency), as well as taxation,measurement and valuation.Those are some of its keychallenges ahead.D A T A PO I N T SPwC survey results42% of all respondents understandthe concept of Bitcoin.4% of all respondents are“very interested” in using Bitcoin.49272249% of all respondents are “not atall” or “not very interested” inusing Bitcoin.% of the previous group citeBitcoin’s lack of trust, security andregulation as why they are notinterested.% of respondents say “nothing”would increase their interest inBitcoin.% of total respondents would bemore likely to trust Bitcoin if itwere distributed by a well-knownthird party.Key points1.2 trillionConsumer trust in banksThe number of U.S. dollars in circulation inJuly 2013.80%US consumer trust11.3 million60%40%U K conustsumer trThe number of Bitcoins in circulation in July2013.20%0%200720082009201020112012Sources: Survey data based on a December2013 PwC survey of 1,000 geographically-diverserespondents. Sample size was 55% female and45% male. Other: BlockChain.info, 2013. Board ofGovernors of the Federal Reserve System, “MoneyStock Measures (H.6),” 2013.Source: Edelman Trust Barometer, 2012.5C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M CBitcoin & EMC: Entertainment sectorBitcoin for direct and global sellingIn 2013, the prospect ofpaying for albums, music andmovies with Bitcoin droveawareness and positive onlinesentiment for the digitalcurrency in the entertainmentsector.Although no leading onlinemusic or movie platforms haveannounced Bitcoin acceptance,several alternative sites, suchas CoinDL.com and Beatcoin.org, have been launched to allowBitcoin-based purchases fordownloads and streaming ofmusic.As a payment platform,Bitcoin presents an opportunityfor filmmakers, musicians,artists, authors, and othercontent creators to more easilysell their work directly to fansworldwide, bypassing a mazeof country-based currencies,payment networks, gatewaysand distribution platforms.Given its no-chargeback model,Bitcoin makes global directselling more attractive as ahedge against credit card fraud.Entertainment companiesor studios could partner withBitcoin-accepting servicessuch as Soundcloud or CoinDL,which are audio platforms thatenable performers to uploadand promote songs. Filmmakersand other content producersare petitioning Indiegogo andKickstarter to use Bitcoin forcrowdsourcing-based funding.9Larger content companiesand their partners may findvalue in experimenting withBitcoin as a payment systemfor specific songs, albums orcampaigns, especially withartists who have global, techsavvy followings. It’s also anopportunity to partner with oracquire entertainment startupsthat build momentum withBitcoin.As with any newinnovation, especially a digitalone, there are gray markets.Modern content creatorsare constantly concernedwith piracy; while a Bitcointransaction is semi-anonymous,its public ledger system allowssophisticated law enforcementagencies to track transactions toIP addresses.10How digital wallets work with Bitcoin: Buying movie ticketsCustomer has a smartphonewith a digital wallet appinstalled, and goes to a movietheatre that supports Bitcointransactions.To buy a ticket, customeruses phone to scan a BitcoinQR code on the point of salemachine that matches theprice of the ticket.The Bitcoin network sendsmoney from the customer’sonline Bitcoin tally to thetheatre’s account. On average,this takes ten minutes or less.D A T A PO I N T SBitcoin in social media2% of all 2013 online Bitcoinmentions involved entertainment.91% favorablemention sentiment.PwC survey results17% of all respondents are “veryinterested” or “interested” in usingBitcoin for internet transactions.Key points 479 billion2012 revenue generated by the UnitedStates’ entertainment and media industry. 632 billionPredicted 2017 revenue generated by theUnited States’ entertainment and mediaindustry.Early innovatorsArtist (and Spice Girl) Mel B made hersingle “For Once in My Life” available topurchase for 0.0012 Bitcoin as of Dec 2013.BitTorrent, in its new business modelas a legitimate content provider,is integrating Bitcoin into its system,encouraging content creators to share musicwith fans in exchange for Bitcoin. It mayalso integrate Bitcoin metadata into its code,potentially open-sourcing innovation amongthe two protocols. BitTorrent’s protocolsgenerate roughly 40% of the world’s internettraffic each day.Sources: Online mention data via Sysomos MAP,2013. PwC’s “2013-2017 Global Entertainment andMedia Outlook,” 2013.Source: PwC Research, 2013.6C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M CBitcoin & EMC: Media sectorGoing beyond the paywallIn 2013, media companiesbegan to experiment withBitcoin. Paywall technologywas a logical first choice. Theability to wall off certain contentfor those willing to pay for it isenhanced by the digital natureof Bitcoin and its divisibility.Bitcoin could make it possibleto charge the equivalent ofpennies, or nickels, for a lacarte content. Bitcoin reducesmultiple currency exchangeneeds with global audiencesand out-of-country feesoften charged by credit cardcompanies for purchasinggoods and services beyond theconsumer’s home country.Has Bitcoin usage spreadsufficiently to make paywallsand micropayments viable formedia companies? The ChicagoSun-Times, the ninth largestnewspaper in the United States,will test that theory with itspaywall in early 2014.11 In themeantime, PwC survey resultsshow that nearly half of theU.S. public is aware of Bitcoin,but have yet to understand itstechnical aspects, which hinderstrust. (See column at right).PwC survey results15% of respondents who were“not interested” in Bitcoin saidthey would “need to know moreabout Bitcoin” before they wouldconsider using it.Micropayments has been along-imagined and researchedfuture for companies that wishto offer content a la carte, buttransaction fees have hindereddeployment for anything soldfor less than 1. In lieu of dailyor monthly subscriptions,2013: Bitcoin mentions in U.S. mass mediaD A T A PO I N T SBitcoin in social media3% of 2013 online Bitcoin mentionsinvolved media companies.95% favorableconversation sentiment.PwC survey results44.5% of consumers aged 18-34are aware of Bitcoin.Key points426% of people who correctlyidentified Bitcoin as a virtualcurrency during a 2013Bloomberg survey.% of people from Bloombergsurvey who incorrectly identifiedBitcoin as an Xbox video game.3,000942,400Early innovators1,800IAC, the parent company ofOKCupid.com, accept Bitcoin forsubscriptions and premium features.1,200TheDishDaily accept Bitcoin for variouslevels of access and subscriptions.% of people skip pre-rolladvertisements when browsingthe internet.Reddit Gold customers can pay with Bitcointo access extra features and gift “gold” toother users.6000JFMAMJJASSource: BBC News Magazine, “Bitcoin: Price v hype,” 2013.ONSources: Online mention data via Sysomos MAP,2013. PwC Survey, 2013. Bloomberg, “MostAmericans Don’t know Bitcoin While some GuessXbox,” 2013. eConsultancy, “Pre-roll video ads: is itany wonder why we hate them?,” 2013.7C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M CBitcoin & EMC: Video game sectorBitcoin driving digital downloadsOur research finds thatBitcoin awareness and usage ishealthy among men aged 25-40.Given those demographics,video game companies havegood potential for benefitingfrom integrating Bitcoin intotheir product and paymentstrategies.Some niche video gamingcompanies are experimentingin the space, such as HundleBundle, PC Game Supplyand Ouya by using Bitcoin aspayment for special game orconsole offerings (see columnat right). Companies in thisspace have the advantage ofmeasuring purchase and loyaltyrates of users who pay withBitcoin vs. traditional paymentsystems. Mobile gamingcompanies are well-suited toaccept and integrate Bitcoin intotheir offerings, given their lackof brick-and-mortar sales.Larger video gamecompanies could incorporatein-game Bitcoin micropaymentsinto their game engines.Specialized video games thatuse Bitcoin as a theme couldbe devised, given that Bitcoinawareness and understandingremain relatively low.Bitcoin seems to makesense for existing online videogame economies, where playerstheoretically cash out existingin-game currency for Bitcoin, orvice versa. While most virtual,in-game currencies can’t becashed out for real-worldcurrency, Bitcoins can be tradedfor dollars.12Video game companiescould build their own, gamebased exchange markets orpartner with companies forexchange markets that createvirtual tools, add-ons, avatarsand themes.D A T A PO I N T SBitcoin in social media983% of 2013 online Bitcoin mentionsinvolved video games.% favorableconversation sentiment.This sentiment level is noticeablylower than other industries in thereport, which average at 93.5%favorability.PwC survey results82% of consumers concerned withfluctuation in the Bitcoin market.Key points13Average number of hours peoplein the U.S. play video games perweek. 112 billionProjected 2015 revenue for the global videogame industry. It was 74 billion in 2011.Case study: ZyngaEarly innovatorsZynga is an online social gaming company that has faced increased competition, loss of players onsocial networks and challenges porting its games to mobile devices. Zynga’s active daily users wentfrom a high of 72 million in 2012 to 30 million in 2013. In January 2014, it announced Bitcoin globalacceptance in their games FarmVille 2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles,Hidden Shadows and CityVille.Potential benefits:Improved profitability due to lower transaction costs for in-game purchases of virtual goods, publicityand social media word-of-mouth exposure, closer alignment with core Bitcoin demographics.Potential challenges:Extending Bitcoin to mobile devices could prove challenging since Bitcoin wallet apps have beenrejected from several leading app stores.Source: TechCrunch, “Zynga Links Up With BitPay For A Bitcoin Payment Test,” 2014. Zynga Game Network,2013. Inside Network Survey, 2013.Humble Bundle accepts Bitcoin for videogame packages under a name-your-ownpricing model. It splits the profits withdevelopers and nonprofits.PC Game Supply accepts Bitcoin for digitaldelivery and for game bundles under aname-your-own price model.The State of New Jersey settled with aonline video game company for 1 millionamid accusations of the company stealingBitcoin from video game players usingmalware.Sources: Online mention data via Sysomos MAP,2013. GameSpot, “Time spent gaming on the rise,”2010. Gartner, “Forecast: Video Game Ecosystem,Worldwide, 4Q13,” 2013. ZDNet, “Video game firmsettles Bitcoin mining dispute for 1 million,” 2013.8C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M CBitcoin & EMC: Travel and tourism sectorBitcoin as a loyalty driverSince Bitcoin’s globaland decentralized digitalinfrastructure is not tied tocountry-specific currencies,travel and tourism companiescould experiment with Bitcoinon multiple fronts.Tourism and vacationcompanies could use Bitcoin tosupplement traditional paymentsystems, making it easier forout-of-country tourists to makereservations. Airlines couldaccept the digital currency fordomestic flight purchases inthe United States (or low spaceorbit; see column at right). Theycould also integrate QR codebased Bitcoin accounts intomobile apps, experimentingwith in-flight payments,hospitality lounges or sellingfrequent flyer miles or points.Bitcoin could be offered asan enhancement to traditionalloyalty programs such as milesor reward points. Leading-edgeresorts could experiment withBitcoin as part of their paymentsystems, whether for in-roomservices, tours or in conjunctionwith mobile devices and specialattractions. For companieswanting to attract technologysavvy consumers, being Bitcoinfriendly could enhance loyaltynumbers. Few large companiesin the sector have publiclyrevealed Bitcoin plans, so earlyinnovators are likely to attracttraditional and social mediabuzz.The travel and tourismindustry is poised to facean onslaught of wearabletechnology that helps usersbetter understand location andcontext, or personal telemetricdata associated with tourism.That means travelers will bemore digitally-savvy, presentingopportunities for companiesto use Bitcoin to offer real orvirtual products, tools andservices associated with travelexperiences.Have Bitcoin, will attempt to travelA Utah couple completed a 101-day trip across three continents using only Bitcoin. The coupledescribed the experiment as “frustrating, but never impossible.” They used Bitcoin to pay for rent,groceries, pizza, rental carsand booking flights with aGerman travel agency. Thecouple traveled to:Provo, USChicago, USKansas City, USPittsburgh, USNew York, USBerlin, DEStockholm, SED A T A PO I N T SBitcoin in social media1100% of 2013 online Bitcoinmentions involved travel andtourism.% favorableconversation sentiment.PwC survey results49% of consumers are “notinterested” in using bitcoin forpurchases online.Key points 129 billionTravel-generated tax revenue to allgovernments.60 millionNumber of new travelers entering the worldtravel market between 2000 and 2010. 1.4 trillionValue of global tourism industry in 2013.Revenue grew an annualized 2.5% over past5 years.Early innovatorsVirgin Galactic to accept Bitcoin forsuborbital spaceflights in 2014. VirginAirlines may accept the currency afterward.CheapAir.com accepting Bitcoin for flights.SimplyTravelOnline.com allows bookinghotels, rental cars and flights with Bitcoin.Source: The Wall Street Journal, “Bitcoin Couple Travels the World Using Virtual Cash,” 2013.Sources: Online mention data via Sysomos MAP,2013. U.S. Travel Association, 2013. IBISWorld,2013. PwC Research, 2013. PwC, “PwC HospitalityDirections: Q3 2013,” 2013.9C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M CBitcoin & EMC: Casino gaming sectorBlackjack, roulette and BitcoinBitcoin as the ideal casinochip? Possibly. It providesa high level of user privacy,immediate access to funds andirreversibility — to the casino’sand player’s benefit.Online casino startups areembracing Bitcoin, primarilyfor its ease of crossing nationalborders, absence of multiplecurrency conversions and lackof restrictions that banks orcredit card companies mayplace on users for online gamesof chance. What’s more, onlineBitcoin casinos typically do notuse third-party processors tohandle transactions, thereforethey are in a gray area regardinglegal issues. For now.With a market estimatedto be worth 4-6 billion, onlinecasinos have ready and willingcustomers.13 Bitcoin-relatedinnovation thus far has focusedon Bitcoin-only games andcompanies, such as SatoshiDice,named after the mysteriouscreator of Bitcoin, and bitZino,whose 2012 reported year-endearnings were 10,137 BTC. In2012, bitZino players made3.2 million bets.14 A Bitcoinonly poker site, Seals WithClubs, allows players to remaincompletely anonymous. Cashins and cash-outs are completedwith Bitcoin. Players need notshare bank account informationor even an email address. Giventhe acquisition activity anddemand for online gaming,expect more Bitcoin-basedstartups.Larger, established gamingcompanies could potentiallyconsider Bitcoin and socialgaming part of a unifiedstrategy to attract youngerdemographics. With onlinegaming laws approved inNevada and New Jersey, Bitcoinis likely to included in ongoingeducation efforts casinos havewith regulators.15Bitcoin-based programsmight also prove attractive forcasinos’ “whales,” big-spendingcustomers whose money mayarrive from other countries.Global interactive gambling gross winsGross Wins (in billion U.S. dollars)6050Bitcoin in social media12% of 2013 online “Bitcoin”mentions involved casinos.92% favorableconversation sentiment.Key points 45 billionThe market revenue for casino gaming in theprovince of Macau. 6.2 billionRevenue generated in 2012 by casinoslocated on the Las Vegas strip, in U.S.dollars.44 online casinos currentlyaccept Bitcoin.Early innovatorsBitZino, a Bitcoin-only gaming company,offers blackjack, roulette and video poker.During its first year of business, 3.2million bets were placed, totaling morethan 664,000 BTC.Seals with Clubs, a Bitcoin-only pokersite, paid out 110,000 BTC over nearly8,000 transactions since opening.40SatoshiDice, named after the creator ofBitcoin,

Bitcoin Black Friday/ cyberMonday: 400 retailers join Bitcoin Black Friday website. Bitcoin nears value of ounce of gold. October silk road controversy. Bitcoin ATMs in canada. Exchange launched in the united Kingdom. May Treasury crackdown on money laundering. presidential candidate

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