
Western Union May Offer Digital Currency Services Similar to Bitcoin - metaverse
http://mobile.blogs.wsj.com/cio/2013/04/01/western-union-eyes-digital-currency-services/
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gesman
Buying bitcoins is a convoluted process especially outside of USA. Western
union certainly has infrastructure to speed-up this process for anyone who is
willing to pay their outrageous fees.

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rhokstar
And to your point, this could be their new competitive advantage.

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VMG
It is unclear if this is an April's Fools joke. It's not far-fetched enough to
be funny.

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metaverse
It's not. I emailed the author and she confirmed it's real.

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jpdoctor
To which I think the only response to Western Union can be: Whoosh.

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kzrdude
Why?

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javert
Because it's sort of like an old-time telegraph company saying, "Telephones?
Hey, let's get in on this by offering a service where we transcribe telephone
conversations and send them out to the other party as a telegraph." In other
words, totally missing the point.

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betterunix
Do you actually think there is no need for money services with Bitcoin? I
think you need to stop for a moment and think about this: what would Bitcoin
be worth if there were no Bitcoin exchanges?

Western Union can provide a lot of relevant services: escrow, conversion to
obscure currencies (or just general exchange), fraud mitigation, etc.

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olefoo
> fraud mitigation

Ah yes. The fraudsters favorite service for irreversible cash transfers will
certainly have an advantage there.

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veidr
Ok fine, fraud facilitation then. Also a lucrative segment.

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edgesrazor
With the coverage the Bitcoin exchange rate has been getting, this was just a
matter of time.

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joezydeco
I see WU looking at things like Bitcoin more to minimize transmission time and
interbank exchange fees on the foreign exchange market. WU can then control
the float time _and_ the margins on exchange rates.

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JumpCrisscross
I do not believe so - interbank transfers are nearly instantaneous and cheap,
especially for a firm like Western Union. The meatier costs are from anti-
fraud and anti-money laundering.

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legutierr
Actually, the majority of their costs come from direct agent fees and
commissions. These fee costs are lower for transactions that originate online,
but most don't; of transactions that do originate online, most are terminated
by agents that pay out in cash, and are compensated for that. Compliance costs
are huge, but they are a fraction of agent fees. It might be said, however,
that a good percentage of those fees are to compensate the agent for their
compliance activities; a lot of the Western Union's customer contact is
handled by the agents, including compliance events.

All of that being said, Bitcoin eliminates or at least reduces many of those
costs, in that delivery and receipt of payment can proceed without the
involvement of the agent. And FinCEN, with its determination that
institutional bitcoin services must be handled by a money transmitter, has
just created a barrer to entry that WU is well inside of.

I concur with you, however, that interbank fees are a minimal component of
their cost. Also, transfers processed by WU and its competitors are usually
instantaneous from the point of view of their customers (part of the value
they bring is the massive network of paying and receiving terminals that exist
worldwide).

Source: I was the head of IT and operations for a money transmitter in a
previous life.

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PaulAJ
As in, how can we respond to this competitive threat that undercuts our
business model while still maintaining our current revenues?

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swang
Where is the appeal in a WU created digital currency?

1\. This will probably mean WU wants a cut of all transactions in any digital
currency they create... for life. 2\. No benefit over fiat currency? 3\. Not
anonymous. 4\. All the "coins" are controlled by WU.

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notahacker
A WU created digital currency would be convertible to cash, on demand, at
one's family's local Western Union agent in their remote village in Africa, so
they can buy food and petrol with it when they need it. Much of this target
market would never have had any access to any form of online payment service
before.

And all the coins being "controlled" by a regulated, profitable multinational
business with a lot to lose from scamming people (and probably tied to the
dollar) is a lot more reassuring than a software protocol administered by a
mysterious foreign foundation - transaction fees or no transaction fees.

Not every product has to be an appealing proposition to US-based early
adopters to be phenomenally useful.

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acd
Hopefully hackers can bring us sound money again. Sound money as in money not
debt money created out of thin air.

The FED is privately owned by the big banks, see "The creature from Jekyll
Island". The senator Aldrichs daughter who was on the island was married to
one of the bankers. The by bank created new debt money out of thin air blows
up assets bubbles that the central bankers later ride in and try and save, by
saving the debt bubbles losses are socialized ie its burden is put to the
people through inflation instead of the bank owners/bond holders taking the
losses. Central banks centrally plan the price of new money by controlling the
interest rate.

It would be good if more viewed the documentary film "The four horsemen".

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TDL
If the FED is private why does turn it's profits over to the US Treasury every
year? Why is the Chairman & members of the Board of Governors nominated by the
President & confirmed by the U.S. Senate.

I don't like the Federal Reserve either, but ignorance & conspiracy theories
of the way the system actually works does no one any good.

"The members of the Board of Governors are nominated by the President of the
United States and confirmed by the U.S. Senate."
<http://www.federalreserve.gov/faqs/about_12591.htm>

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BrokenPipe
If bitcoin is going to be here in 2 years then I think it's undervalued. In
some exchange it has reached past $111

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ryusage
Where about do you think it ought to be valued? Personally, as a completely
casual observer, the current valuation seems incredibly high and
unsustainable, but I'll admit that's an uninformed gut reaction.

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kgo
Current Market Cap is at $1 billion.

Let's say all bitcoin becomes is a paypal killer.

Paypal had a total payment volume of $145 billion in 2012. Now you can't just
say a fair value for bitcoin's market cap is $145 billion because that doesn't
take money velocity into account. Some of that volume could be the same
dollars floating around. You don't need $145 billion in cash all at once to
cover that activity. But paypal's revenue was $5.6 billion. So the amount
bitcoin needs to be worth to handle the same amount of business as paypal is
somewhere between those two numbers, and even a low $10 billion prices
bitcoins at $1000 each.

Visa Inc had a total payment volume of $6.4 Trillion in 2012. Of course in
addition to figuring out the actual money velocity you need to remove the
credit component since bitcoin doesn't do that. But some sketchy back-of-the-
envelope math can demonstrate that a $100 billion dollar market wouldn't be
unheard of, with $10,000 bitcoins.

Of course I'm talking like 10-20 years out for anything like that, not today.

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th0ma5
What is stopping someone from looking at Bitcoin, changing something simple,
and competing immediately?

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SilasX
Nothing but getting people to use the competing currency. There are already
numerous competitors trying to get momentum.

