To healthcare organizations, digital currency is the thing you’re forced to deal with when your systems are held for ransomware. To the rest of the world, it’s increasingly starting to look like the future.
Credit: Getty Images
Tesla caused somewhat of a stir last month when it disclosed
that it had bought $1.5b of bitcoin. It also said it would start accepting bitcoin
payments for its cars. CEO Elon Musk
added to the furor, saying: "I do at this point think bitcoin
is a good thing. I'm late to the party, but I am a supporter of bitcoin.”
Most of us are late to
the digital currency party.
Bitcoin’s market cap hit
$1 trillion in mid-February, although it now hovers just over $900b, with Ethereum
another almost $200b. Tesla is making
more money from its bitcoin investment than from its core businesses. In the scheme of global financial markets,
digital currencies are still small, but are not something any CFO should be
ignoring. 
Credit: FamZoo Staff
Tesla is
not the only major company accepting digital currencies; Overstock, Starbucks
and Twitch do, as three wildly different examples. Twitter is
thinking about paying vendors or even employees with bitcoin. Facebook expects to launch its own cryptocurrency
this year.
I’m not aware, though, of any major healthcare
companies accepting or paying with digital currencies. No Tesla-type breakthroughs in
healthcare.
Banks recognize the threat that digital currencies could pose to them. Just today, Citi allowed that bitcoin could “become the currency of choice for international trade.” Its research note went on:
Bitcoin’s future is thus still uncertain, but developments in the near term are likely to prove decisive as the currency balances at the tipping point of mainstream acceptance or a speculative implosion.
Bank of New York MellonCorp announced
last month that it would hold, transfer and issue bitcoin and other cryptocurrencies
for its asset management customers. “Digital assets are becoming part of the mainstream,” said
Roman Regelman, chief executive of BNY Mellon’s asset-servicing and digital
businesses. JP Morgan isn’t
there yet, but last week said
it would allow investors to hold up to 1% of their portfolio in cryptocurrencies.
PayPal announced last October: “Beginning in early 2021, PayPal customers will be able to use their cryptocurrency holdings as a funding source to pay at PayPal's 26 million merchants around the globe.” Dan Schulman, president and CEO, said:
The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly.
Mastercard
and Visa are also
already bowing to that inevitable.
One of the aspects of
bitcoin and other cryptocurrencies that holds much appeal is that they bypass
central banks, unlike so-called “fiat currencies” issues by nations’ central
banks. Those central banks are recognizing
that they risk being left out of the future, and are determined to have their
say.
A recent Bank for
International Settlements survey found that
more than 86 central banks were exploring a central bank digital currency, with
more than 60 countries already testing the concept. Countries like the Bahamas (Sand Dollar) and Sweden (e-krona) are
already far along in their testing; the Swedish central bank (Riksbank) wants
making e-krona payments to be “as easy as sending a
text.”
Credit: Ledger Insights
Even the U.S. is
finally coming around to the idea, with Treasury Secretary Janet Yellen allowing
that digital currency was “absolutely worth looking at” because it “could
result in faster, safer and cheaper payments,” although she also
expressed some concerns. Fed Chairman
Jerome Powell told
Congress that such a currency is a “high priority project for us…This
is something we're investing time and labor in, across the Federal Reserve
system”
But, as Frederick Kempe,
President & CEO of the Atlantic Council, wrote
in a CNBC op-ed: “Yet while the Fed consults, China
executes.”
China is, indeed, not
late to this party. It is aggressively
working on a national digital currency. The
New York Times reported:
“no major power is as far along as China. Its
early moves could signal where the rest of the world goes with digital
currencies.”
Mr. Kempe worries:
Chinese officials have made no secret that their greatly accelerated efforts at introducing and distributing the digital yuan are an opening move in their long-term strategy to undermine the dollar’s global supremacy and expand their influence.
If the U.S. loses the high ground of financial technological innovation, combined with a weakening of the dollar’s global dominance, the benefits for Beijing would be considerable.
An article in the
magazine of China’s central bank admitted:
“The right to issue and control digital currencies will become a ‘new
battlefield’ of competition between sovereign states.”
I’ve written before about how China is threatening America’s
lead in emerging
technologies, social
media, and AI
healthcare, but I hadn’t thought much about losing “the high ground of
financial technological innovation” to China as well. It’s a battlefield we’re not prepared for.
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In the best case, digital currencies could make
payments “as easy as sending a text,” as Rikbank hopes. They should make processing those payments
faster, more secure, and less impacted by national boundaries. They’d open up electronic payments to the
unbanked; anyone with a smartphone could use them.
KHYLIN WOODROW/BLOOMBERG BUSINESSWEEK
In the worst case, though, they could further erode
privacy; all those anonymous cash or bitcoin payments could be tracked, such as
through a central bank. Yaya
Fanusie, a fellow at the Center
on Economic and Financial Power, told
The New York Times: “This is
about more than just money. It’s about
developing new tools to collect data and leverage that data so that the Chinese
economy is more intelligent and based on real-time information.” China won’t be the only country with such
interests.
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The Digital Currency Initiative
at MIT Media Lab says its mission is “to create a future in which moving value across the Internet is as
intuitive and efficient as moving information.”
That just makes me smile; when it comes to healthcare, moving information
is still neither intuitive nor efficient.
Healthcare has lots on its plate right now, with a
host of legacy issues that have only been exacerbated by the pandemic. I get that.
Incorporating digital currencies is not on the front burner. But ignoring them won’t make them go away; it
will only make the “inevitable” transition harder.
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