Over the last several years the landscape for money movement has changed dramatically. Non-state-backed, decentralized digital currencies such as bitcoin have introduced new paradigms for money movement in which transfers are public but the identities of the individuals behind the transfers are masked. Traditional currencies are being moved in novel ways as well: In the developing world, unbanked populations are engaging in an increasingly sophisticated array of financial transactions using mobile phone-based mobile money services.
These changes present both opportunities and challenges. The bitcoin protocol, for example, makes it possible to transfer money with much less overhead than traditional payment systems. Mobile money has become a vital tool for financial inclusion for tens of millions of people in the developing world. Yet all mechanisms for moving (and storing) money—new and old—involve risks and the potential for misuse.
This presentation will include a high level overview of the bitcoin protocol, including an explanation of how public key cryptography is used to facilitate pseudonymous transactions, how those transactions are verified using the collective processing power of thousands of distributed network nodes, and how new bitcoins are mined through a “proof of work” in the verification process. It will also discuss the cryptographic currency ecosystem more generally, including the regulatory landscape at the federal and state levels and internationally. And, it will provide an overview of the important changes that mobile money is bringing in developing countries.