On Wednesday, the U.S. Treasury Department announced that a woman will be the new face of the $10 bill. She will be the first adorning U.S. paper currency since Martha Washington, more than 120 years ago. The select few other women on currency—Helen Keller, Sacagawea, and Susan B. Anthony—were featured on dollar coins that have limited circulation because, as commentators point out, no one really uses dollar coins.
The irony here, of course, is that the future of payment systems, and even currency, is electronic. As Forbes “coined” last year, cash is trash. The new poster child of currency is bitcoin, a digital currency that is created and held electronically and whose value is based on mathematics. A mathematical formula is used to produce bitcoins, and the software programs used to create bitcoins is “open source” so that anyone can look at it.
As currently structured, only 21 million bitcoins can ever be created. The coins can be “divided” into smaller parts for use, with the smallest divisible amount at one hundred-millionths of a bitcoin. In March, the Bitcoin Investment Trust, which holds bitcoin in a trust, received FINRA approval to publicly trade shares. Bitcoins even have an exchange rate. Today, one bitcoin equals roughly $245 U.S. dollars, and Forbes reports that the current value of outstanding bitcoins is more than $1 billion.
Bitcoin advocates cite many advantages. The currency is decentralized—not controlled by a central authority that dictates supply. A user can set up a bitcoin address easily at no cost, and the user’s identity is nearly anonymous. Bitcoin use is transparent because every transaction is recorded on a general ledger called the “blockchain.” Transaction fees are minimal. For example, bitcoin does not charge a fee for international transfers. Transactions are also fast, arriving as soon as the bitcoin network processes a payment.
However, bitcoin has its critics. Some argue that bitcoin usage is ripe for fraudulent use and criminal activity and that no legitimate form of commerce uses bitcoin. Bitcoin exchanges are also vulnerable to attack, with Mt. Gox as the most prominent example. There, more than $450 million worth of bitcoin vanished from the platform without ample consumer protections to remedy losses. All of the security breach vulnerabilities that financial institutions currently experience are arguably more acute in the bitcoin world, where networks and electronic wallets can be hacked. Bitcoin’s scale is also relatively small at this point, as bitcoin protocol limits the size of each block, which limits the number of transactions that can be processed in a one-hour period.
Commentators disagree about whether bitcoin itself will ever really take off and become widely used. But even the luddites among us know that payment systems of the future will rely on evolving technologies (think mobile phones). So hang onto your $10 Harriet Tubman (or Rosa Parks or Eleanor Roosevelt). It may be a collector’s item someday. And women will know they’ve really made it when the song “It’s all about the Tubmans” goes multi-platinum.
S.P. Slaughter
Follow me on Twitter: @SP_Slaughter
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