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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.
Tuesday, June 23, 2015
Oregon’s new marijuana law is expected to lead to a bevy of new business opportunities for the state. And not just for growers. Law firms, HR consultants, energy efficiency companies and many others are expected to benefit from the decriminalization of pot, according to panelists at an Oregon Business breakfast meeting on Tuesday.
Friday, May 22, 2015
BY AMY MILSHTEIN
Astrid Scholz scales up sustainability.
Thursday, May 21, 2015
BY JASON NORRIS | GUEST BLOGGER
Uncertainty is a part of doing business, whether in through the lens of investment opportunities and risks or the business of running an enterprise.
Friday, May 22, 2015
BY CHRIS NOBLE
The right sunglasses can protect your eyes and look cool at the same time. This being the 21st century, select shades are socially conscious, too. Portland brand Shwood uses wood and other natural materials and manufactures locally. Founded by Ann Sacks, the brand Fetch dedicates a portion of its profits to animal welfare. But whether you choose classic tortiseshell or aviator chic, please, shed the sunglasses when you walk in the door — and, of course, at night.
Friday, May 22, 2015
BY JACOB PALMER
A Power Lunch at Oswego Grill.
Wednesday, June 24, 2015
One year after he was appointed chair of the Portland Development Commission, Tom Kelly talks about PDC's longevity, Neil Kelly's comeback and his new role as Portlandia's landlord.
Thursday, May 14, 2015
BY JASON E. KAPLAN | STAFF PHOTOGRAPHER
There are more than 160 farmers markets in Oregon, contributing an estimated $50 million in sales, according to the Oregon Farmers Markets Association. We checked in on the Forest Grove market, which for several years has brought local produce and food vendors to Main Street in the center of town.
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Tonkon Torp helps seed sustainability at Gunderson.
Oregon-based Environments helps companies create inspired workspaces. “Simply put, we help companies future-proof their workspaces,” says Chris Corrado, president. Since 1988,Environments has witnessed firsthand the changing landscape of business. Native Portlander and Environments founder Corrado says, “We help our clients navigate the complex realities of the workplace today and plan for their future in a very mindful, strategic way. We think of ourselves as their partners in the process.”
One hundred years ago, the Willamette River might easily have been mistaken for a sewer. Unchecked industrial activity and decades of pollution made it unrecognizable compared to the clean river that now flows north for 187 miles from Eugene through the center of Portland.
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Bend energy leader brings passion for efficiency and renewable energy to the nonprofit.
Event in Forest Grove marks recognition of Global Food Safety Initiative Certification.