Closing the door on Bitcoin startups. Biased much?

New JAXenter column about cryptocurrency and blockchain: [Bit]coin flipping

Gabriela Motroc introduces a new weekly column which presents and discusses about the latest news in the cryptocurrency field. Week after week, we will dissect the facts, talk about comfortable and not so comfortable matters and ultimately invite readers to have a say in this new and exciting journey.

Business prejudice can be found in all industries and disciplines, but bitcoin startups have unthinkingly taken bias to a whole new level. In an article penned last month, Reuters revealed that bitcoin is by far the most popular cryptocurrency, claiming 80 percent of the European market. This virtual currency is slowly but surely gaining ground, and initiatives such as bitcoin embassies are starting to shape up. However, accommodating bitcoin in business models is not a popular habit nowadays.

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It all started six months ago, when The Australian Financial Review discovered that Australian banks were suddenly withdrawing banking services from bitcoin companies. The publication cited Ron Tucker, chairman of the Australian Digital Currency Commerce Association, as saying that all major Australian banks were closing the door on bitcoin companies without offering any further explanation. One of the possible scenarios that can explain this move is that bitcoin companies have started to disrupt a well-established sector and are even becoming part of the mainstream in some areas where bitcoin acceptance is growing.

Bitcoin companies disrupt the traditional financial sector’s sleep

The financial sector may or may not be deliberately suffocating bitcoin businesses, but some claim that this is the reason why a huge number of bitcoin companies failed to make it to 2016, even though some of them had potential. Bonafide and Buttercoin are just two examples of companies that closed their doors after receiving the green light -and funding- from investors, but the list could welcome a lot more candidates as the European Commission is planning to enact new regulations in the next few months. Although the aim of such a crackdown is to cut off financing to terrorists, some voices say that education, not regulation will clear bitcoin’s name and help cryptocurrency startups flourish.

Even when restricted, technology finds a way to deliver new tools. The traditional financial sector may continue to belittle bitcoin companies’ potential, but their development is supported by numbers. Just a couple of years ago, Europe claimed 25 percent of the bitcoin network and chances are that the number has grown exponentially. Europe-based companies SatoshiPay, Bitbond and Ledger Wallet are transforming Europe into the center of bitcoin interest, but history and failed companies such as Buttercoin and Bonafide prove that success does not only depend on community support.

What do industry disruptors need to flourish?

Just like Uber, bitcoin companies have disrupted a well-established industry which is likely to fight back. Australian banks’ decision to withdraw banking services from bitcoin companies is only one example that has recently transpired. These startups need more than the acceptance of the financial sector -they need governments’ support, without which they cannot grow at their own pace. In short, innovation cannot occur without the consent of legislation and bitcoin companies cannot be successful without a suitable legal framework that protects their rights and encourages their progression.

In the end, this new and productive ecosystem which encompasses bitcoin startups cannot flourish unless regulators in Europe and beyond realize that traditional industries should not rule the world. The manner in which the financial system will deal with the presence of bitcoin companies could dictate the latter’s course of action: penetrate the mainstream financial industry or go underground.

Gabriela Motroc
Gabriela Motroc was editor of and JAX Magazine. Before working at Software & Support Media Group, she studied International Communication Management at the Hague University of Applied Sciences.

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