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|Articles - March 2014|
|Tuesday, February 25, 2014|
Page 4 of 5
A sea change in currency
The 2009 economic collapse rattled the image of large banks and the governments that monitor them. Add to that digital tech innovations and you have the perfect storm: alternative currencies poised to disrupt the existing financial system — even if those currencies are still but a blip on the radar screen.
First, a brief history of existing currency and its institutional ties: Throughout the 1800s, the gold standard, which linked currency to reserves of gold, dominated the world’s monetary system. Following the Great Depression, the U.S. dollar began its breakup with gold. In 1971 President Richard Nixon took the U.S. dollar off the gold standard, forever untying the currency’s value from any physical commodity.
In 2008 the financial services firm Lehman Brothers filed for bankruptcy. With over $600 billion in debt, it was the largest bankruptcy in U.S. history and set off the great recession. “All that value with Lehman Brothers just went poof, and when it did, it caused people to ask: ‘So where does that money go and what was it in the first place?’ You break the spell,” Wolman says.
Europe has faced a similar crisis over the euro. Last year a central bank-bailout deal in Cyprus required depositors to forfeit part of their savings accounts. In Argentina the peso has been hypernflated. Collectively, these events have set the stage for alternatives to government-backed currencies.
Enter “cryptocurrencies” such as Bitcoin, a nonpolitical digital money proponents say is immune to mismanagement or manipulation while also giving a boost to local economies and entrepreneurs. “Bitcoin wasn’t born of a philosophy, but it fits a lot of philosophies,” says Jinyoung Lee Englund, spokesperson for the Washington DC based Bitcoin Foundation.
One basic idea is that digital money can be sustained through a worldwide, decentralized, Internet-based architecture, eliminating the need for overlords of finance.
In recent months, Bitcoin has received a tremendous amount of (breathless) press; nevertheless, at this point, it’s hard to tell whether the cryptocurrency is real or imaginary, a passing fad or a bona fide disruptor. A smattering of small businesses do accept Bitcoin, including Portland’s Whiffies Fried Pies. Virgin Galactic will accept Bitcoin for trips to space. In January online retailer Overstock.com announced that it would begin accepting the currency, with 840 orders worth $130,000 in sales on the first day. Some large investors have also taken an interest.
“The real test is when larger companies make that big leap to allow it to become mainstream,” says Brian Bolton, assistant professor of finance at Portland State University.
The virtual currency is also tainted from its association with the drug trade and is rife with security flaws and price volatility. According to figures on Blockchain.info, at its peak Bitcoin was trading for $1,203 late last year, before losing half its value a few weeks later after a regulatory crackdown in China.
Of course, most new innovations have rocky starts. Englund, for one, argues more infrastructure will bring stability to digital currencies. In Portland one company is trying to help build that infrastructure. Gliph is an application that allows users to conduct Bitcoin transactions with their smartphones. Launched in 2011, Gliph was originally a secure messaging app, with the Bitcoin function added in 2012, according to Rob Banagale, the company’s founder. Banagale says the app has 30,000 users, although Apple doesn’t allow the Bitcoin function of the app.
“Using Bitcoin today, it’s like dialing up to the Internet in 1995,” says Banagale, who hopes that his app will enhance the currency. Although Banagale says that the volatility of Bitcoin is an issue, he says the idea of digital currencies has caught on so strongly that no government could regulate it out of existence.
There are other cryptocurrencies, such as Ripple, Litecoin and, recently, Dogecoin, a currency based on an Internet meme that was created with the help of Portland developer Billy Markus. Indeed, Bitcoin itself may become obsolete with a “rainbow of currency options” emerging, says Wolman. For instance, one digital currency might be good for airline tickets, another for the farmers market.
Marcus Koch, the owner and principal of Portland-based Koch Architecture, took his first payment in Bitcoin for a remodel job last year. He says it is easier to use than checks and has a significantly lower transaction cost than credit cards, which can be as high as 3%. Koch says he wouldn’t invest his life savings in Bitcoin, but he thinks it could benefit small businesses.
Bolton also expects several viable cryptocurrencies to emerge, but he also thinks they are unlikely to challenge the dollar or euro, which are tied to such large economies.
Wednesday, July 15, 2015
Former Governor John Kitzhaber's resignation in February prompted some soul searching in this state about ethical behavior in industry and government.
Wednesday, August 19, 2015
BY BRIAN LIBBY
Ben Kaiser holds his ground.
Tuesday, July 14, 2015
The Big One serves as an allegory for Portland, a city that earns plaudits for lifestyle and amenities but whose infrastructure is, literally, crumbling.
Wednesday, July 15, 2015
We asked readers to weigh in on the fossil fuel-green energy equation.
Wednesday, August 19, 2015
BY LINDA WESTON
In 1996, after a 17-year career in the destination marketing industry, where I gained national standing as the CEO of the Convention & Visitors Association of Lane County, I was recruited by the founders of a new professional basketball league for women. The American Basketball League (ABL) hoped to leverage the success of the 1996 USA women’s national team at the Atlanta Olympics — much like USA Soccer is now leveraging the U.S. Women’s National Team’s victory in the World Cup. The ABL wanted a team in Portland, and they wanted me to be its general manager.
Wednesday, July 15, 2015
We asked readers how Obamacare has impacted their business.
Friday, July 10, 2015
BY LINDA BAKER
Market of Choice is on a tear. In 2012 the 35-year-old Eugene-based grocery chain opened a central kitchen/distribution center in its hometown. The market opened a third Portland store in the Cedar Mill neighborhood this year; a Bend outpost broke ground in March. A fourth Portland location is slated for the inner southeast “LOCA” development, a mixed-use project featuring condos and retail. Revenues in 2014 were $175 million, a double-digit increase over 2013. CEO Rick Wright discusses growth, market trends and how he keeps new “foodie” grocery clerks happy.
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Oregon Sick Leave is here, and changes to the federal white-collar worker regulations are on the way. This workshop will prepare you for both. We invite you to participate in an interactive discussion on how to start planning now for the future impact on your operations and finances.
Presented by OEN + CENTRL + YESpdx.
This Roundtable will cover numerous issues under the employer "shared responsibility" rules of the Affordable Care Act, including how to track the "full-time" status of variable-hour employees, temporary or seasonal employees, and employees who experience a change in status or a break in service. Additionally, we will provide a brief overview of Code sections 6055 and 6056, which require most mid-sized and large employers to submit their first information reports to the IRS in early 2016 regarding the health insurance coverage being offered to employees. We invite you to participate in an interactive discussion on how to prepare for the future impact of the shared responsibility rules on your operations and finances.