Unlike the lackluster adoption of existing mobile wallets, the adoption of Bitcoin-based mobile wallet will be driven by merchants this time. Why will merchants lead adoption of Bitcoin network and its first application, digital currency? Why will consumer adoption of Bitcoin continue to grow? What makes Bitcoin-based mobile wallet superior to mobiles wallets currently available by Google, ISIS and and other payment networks?

1. Why Bitcoin Adoption Will
Continue to Grow
Taras Kuzin
November 2013

2. BITCOIN CURRENCY AS FIRST
APPLICATION OF NETWORK
AND
A FEW CURRENT STATS
Taras Kuzin

3. Text is Bitcoin
What
Bitcoin is digital money used directly between people to buy
goods and services. Cryptography is used to make it
impossible for anyone to spend funds from another user's
wallet and can be used to encrypt a wallet so it can't be used
without a password. This type of security is also used for
credit card transactions and electronic bank transfers.
Similar to any other currency, such as US dollars, it requires a
wallet - digital wallet to be precise. It is used to send and to
receive payments using unique addresses. No coin can be
reproduced or double spent. Unlike current digital wallet
solutions, Bitcoin transactions are independent of card
networks and cost a fraction of the traditional debit card
interchange fees.
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4. Text
Ben Bernanke’s letter to Congress: Bitcoin and
other virtual currencies “may hold long-term
promise.”
“We ought to uphold America’s position as
center of technical innovation by welcoming the
new currency - but that can’t be done without
government safeguards and regulations.”
Sen. Tom Carper
Congressional Hearing on Virtual Currency
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5. Text Transactional Network is Growing Rapidly
Bitcoin
FROM 0 TO 28 MILLION
TRANSACTIONS ANNUALLY
IN LESS THAN 3 YEARS
Over 80K transactions take place daily and these
numbers are growing rapidly, as awareness grows.
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6. Sizing Up Today's Bitcoin Market and Growth
Number of merchants
accepting Bitcoins
grew from 6K in 2012
to 20K in 2013.
$120M
BITCOIN
MERCHANT
PROCESSING
Million USD
$160B
AUG
$20B
BITCOIN
EXCHANGE
MARKET
$87B WORTH OF BITCOINS
WERE TRANSFERRED WITHIN BITCOIN
NETWORK AMONG USERS IN NOVEMBER 2013
The total Bitcoin market size was $87B in November and the exchange
segment grew from $1.5B to $20B from August to November.
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7. Dollar Volume is to Reach $160B in 5 Years
Million USD
$160B
AUG
The Bitcoin exchange market exploded from $50M to $20B in one year and is limited
only by the lack of connection with brick and mortar banking financial systems.
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8. ADOPTION DRIVERS FOR
MERCHANTS AND CONSUMERS
Taras Kuzin

9. Why Merchants Will Lead Adoption of Bitcoin
 Bitcoin network is low cost processing alternative (between 0.5 and 1 percent) to existing
card networks.
 There are no charge-backs with Bitcoins, because by design Bitcoin transactions are
irreversible.
 Bitcoin network provides low cost integration -- there are no costly multimillion dollar
investments in POS.
 No merchant account approval is needed, unless you work with a Bitcoin merchant
processor.
 Funds are instantly deposited in your Digital Currency account, unless you settle in fiat
currencies.
 There are no FX conversion on purchases made from outside your country of operations,
 Currently, most merchants accepting Bitcoins are bringing in new clients.
 Bitcoin can work like a Letter of Credit - payments are settled with certain conditions are
met and confirmed by other parties.
 No card database breaches (e.g. Target) are possible with Bitcoins.
Unlike the lackluster adoption of existing mobile wallets, the adoption of
Bitcoin-based mobile wallet will be driven by merchants this time!
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Taras Kuzin

10. Why Consumer Adoption Will Continue to Grow
 Digital currencies are always with you, wherever you have access to the
Internet (e.g. mobile phone).
 No inflation will affect the value of your Bitcoins, since no government can print
more of them.
 People who distrust banking systems (e.g. migrant workers) or can't get
banked, can have safe and mobile savings accounts.
 There is no need to convert your home country currencies, when you travel
abroad.
 No bank, PayPal, or government can arbitrarily freeze your funds.
 When you need to pay your pal for your portion of something (dinner, event
tickets), P2P payments are instant, cost less than 5 cents and never go
through a third party bank.
 You never have to worry about your credit card number being stolen.
 Bitcoin payments are as anonymous as you want them to be.
Value Proposition is even greater for consumers in the developing world
with less developed banking infrastructure and corrupt governments.
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11. A Trip Down Memory Lane (March 2011)
Here are a few factors I outlined in 2011 that would have
facilitated adoption of mobile wallet(s) in the United States:
1. Development of “Open Mobile Wallet” (open source software).
2. Use of Near Field Communications (NFC) contactless technology
resident in a smart phone and merchant terminals.
3. Use of existing rails, including the ACH network for non-card
payments, for mobile payments platform(s).
4. Dynamic data authentication for security and fraud mitigation.
5. Industry certification program to ensure both domestic and global
interoperability.
6. Development of regulatory oversight model and compliance
responsibilities by bank and non-bank regulators.
7. Creation of Trusted Service Managers that would oversee the
provision of interoperable and shared security elements used in the
mobile phone.
Bitcoin network and its first application, Bitcoin
currency, solve many of these problems.

12. Why Bitcoin Foundation Won’t Hijack Bitcoin
The Bitcoin Foundation has indeed a great deal of power to influence Bitcoin network rules.
Nevertheless, there are still checks and balances to prevent Bitcoin Foundation from abusing
its power.
First, here is the group of individuals that determines directions of new developments and
features of the Bitcoin network.
http://bitcoin.org/en/development
Moreover, even if these individuals conspired to rig the Bitcoin network, there would still be the
final "guard" that will prevent the abuse of power by Bitcoin Foundation. Here is what needs to
take place in order for the new rule/feature to affect the Bitcoin network. If Bitcoin Foundation
tries to implement a new abusive or corrupt rule, by way of new software version, the new rule
will not be implemented unless 51 percent of mining users (mining pools) install the latest
version. Since individuals running mining pools are financially vested in Bitcoin network and
are also smart guys, they will allow not allow new harmful system updates. That is, they will
not update software running on their servers/computers, in order to prevent Bitcoin
Foundation's abusive or corrupt new rules. Essentially, the process is like selling accounting
software to banks - there will be 1,000's of security checks, before the software is installed and
running.
In summary, no one can introduce new rules without consent from the majority of the network.
This rule is at the core of the Bitcoin technology and is fundamental to Bitcoin function.
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13. Great Educational Bitcoin Videos
Great video for basic understanding of Bitcoin network and digital currency https://www.youtube.com/watch?v=Um63OQz3bjo
IBM executive's predictions http://www.finextra.com/Video/Video.aspx?videoid=513&goback=%2Egde_
3721050_member_5801733873977024514#%21
Andreas Antonopoulos's view of Bitcoin industry https://www.youtube.com/watch?v=c2CsJ2HMA2I
US Congress discussions pertaining to Bitcoin https://www.youtube.com/watch?v=CSTo9XgOgtY
On November 22, daily dollar volume (principle) processed on Bitcoin network
surpassed of those processed by Ria, MoneyGram and Western Union http://coinometrics.com/bitcoin/btix
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14. TARAS KUZIN
+1 (720) 431-2208
tkuzin@gmail.com
Taras Kuzin