The Coinbase Blog announced that the company formed a partnership with Mint, the 10-million user personal financial management service. This is a good move, and it caused me to think about the key factors that will determine the success of Bitcoin. There are many technical, trust-related, adoption, regulatory, and other factors that will determine the ultimate fate of Bitcoin. Here is my short list:
Adoption by users as measured by the number of digital wallets
Adoption by merchants and services accepting BTC for payment
Light regulation: enough to substantiate, not enough to stymie
BTC industry partnerships
I would like comment on number four. Coinbase, an exchange that provides digital wallets and merchant services and which I use, this week announced the partnership with Mint. I was an investor in Mint through First Round Capital and have followed it since it began. It was acquired a few years ago by Intuit. Mint is a very creditable company, and the integration with Coinbase is a win-win. Mint users will now have a way to reflect their BTC holdings along with their other investments and accounts. Coinbase gains creditabiility by being in partnership with a well-known financial services company. Another important partnership that Coinbase should make is the integration with Quicken. As with Mint, integration with Quicken would allow Coinbase accuont holders to reflect their BTC holdings along with their other financial accounts. The integration should not be hard since Quicken is also part of Intuit.
How would Quicken users categorize BTC? Should it be treated as a liquid asset the same as a checking or savings account, or as an investment such as gold or silver, or as a brokerage account asset? Any could work and the question of where to put BTC in Quicken gets at the larger issue of the future of BTC. I have included BTC as an investment holding in a Coinbase account in Quicken (have to do this manually until the integration is available). In other words it is like holding AAPL stock in a Merrill Lynch account. Why would BTC be an investment if it is supposed to be a currency (crypto currency)? My view is that in the long run, BTC is a payment platform that will be used for many purposes (more thoughts on that later). In the short run, the usefulness of BTC is limited, and as the usefulness grows through more adoption, the value of BTC will increase. At some point, the value of BTC relative to the U.S. dollar and other currencies will stabilize. The estimate by “experts” of the value for the stabilized BTC ranges from zero to $47,000.