The financial center of gravity for Bitcoin technology got another tug in the direction of the UK over the weekend...
That's when Barclays Plc. (NYSE ADR: BCS) - one of the UK's largest banks - announced it would allow people to make donations using the digital currency.
A report in The Sunday Times said Barclays will partner with an unnamed Bitcoin exchange to execute the transactions. For now, only charities will be allowed to deposit bitcoins into Barclays accounts.
The move is just a first step for Barclays, which is devoting significant resources to Bitcoin technology. According to The Sunday Times, Barclays has 75 people in two locations working on Bitcoin technology.
Like many major Wall Street banks, Barclays recognizes the potential of Bitcoin technology to disrupt the financial industry.
"There is so much pull and interest on this right now," Derek White, Barclays' chief digital officer, told The New York Times. "That comes from a recognition that, 'Wow, we can use this to change the fundamental model of how we operate to create our future.'"
And while Barclays is the first major UK bank to support Bitcoin technology in this way, others are likely to follow quickly...
Why the UK Is Adopting Bitcoin Technology
The UK very much sees Bitcoin technology, as well as the growing influence of "fintech" companies, as an avenue to snatch back the title of "world's leading financial center" from New York.
At the end of July, UK Prime Minister David Cameron's government published a manifesto outlining its intent to nearly double the number of people working in the fintech field by 2020.
"This government wants the UK to be the leading fintech center in the world," Cameron said. "This will ensure we are a world leader in the development of financial services technologies."
But New York's financial heavyweights are also getting more involved in both fintech and Bitcoin technology...
New York Won't Let London Dominate Bitcoin Technology
Here's what's been happening over the past year:
- In January, the New York Stock Exchange participated in a $75 million VC funding round for Bitcoin wallet startup Coinbase.
- In May, Goldman Sachs Group Inc. (NYSE: GS) participated in a $50 million funding round for Bitcoin startup Circle Internet Financial.
- Also in May, Nasdaq OMX Group said it was launching a pilot project to use the Bitcoin blockchain to settle trades in the Nasdaq Private Market. This small marketplace facilitates pre-IPO investing in private companies.
- Several top names in U.S. finance are working with Bitcoin-based companies: Former JPMorgan Chase & Co. (NYSE: JPM) Head of Global Commodities Blythe Masters is chief executive of Bitcoin startup Digital Asset Holdings LLC; former FDIC Chairperson Sheila Bair is on Bitcoin exchange itBit's board; and former SEC Commissioner Arthur Levitt is an advisor to payment processor Bitpay.
As far as the Bitcoin technology is concerned, it doesn't much matter whether New York or London ultimately emerges as the fintech capital of the world.
That the world's top two financial centers are fighting for the title means a lot of the best financial brains on the planet are studying ways to adopt Bitcoin technology.
While the volatility of the Bitcoin value has made many wary of it, the rising involvement of leading banks like Barclays will help lend legitimacy to the digital currency. And that will be a key element in spurring wider adoption among the general public.
"A year ago, [Bitcoin] was more of an idea," Max Neukirchen, the head of corporate strategy at JPMorgan Chase, told The New York Times. "Now, it is a real opportunity. You test it and realize that this can play a big role in our thinking about how our own infrastructure will evolve."
Follow me on Twitter @DavidGZeiler.
Why the Bitcoin Price Is Down: As recently as mid-July, Bitcoin was flirting with $300. But since then, it has dipped as low as $179, although it has stabilized in recent days between $225 and $230. The decline had nothing to do with the stock market or China, but an issue that's been tearing the Bitcoin community apart for weeks. Here's what's happening...
- The New York Times: Bitcoin Technology Piques Interest on Wall St.
- The Sunday Times: Barclays to Set Bitcoin Rolling
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.