It's no secret that cash as a method of payment is dying.
Credit, debit and online payments are accepted almost everywhere.
And in some cases, like on an airplane, cash is no longer even an
But I'm not into the whole Bitcoin thing. I just don't believe
that it's a viable currency. Call me old fashioned, but I'll
stick with dollars,
Electronic payment processors - like PayPal, which is owned by
) - represent a much better investment opportunity than Bitcoin.
That's because one of the real opportunities for Bitcoin is to
replace cash in economies where a lot of people don't have bank
accounts. These people have a need for a virtual currency, and
something like Bitcoin could fill that need.
But so can PayPal. And for that matter, so could
products from other electronic payment processors like Visa (
) and MasterCard (
), if they introduced them. The fact that payments through these
providers are backed by a regulated and understood currency makes
their adoption much more feasible.
A lot of the value in Bitcoin comes from the expectation that
a unit of the virtual currency will be worth more in the future.
That's not a good thing for a currency that should be used as a
medium of exchange. It opens the door for consumers and vendors
who use it to get badly burned.
In sharp contrast, the shift toward electronic payments has
made payment providers MasterCard and Visa insanely good
investments for investors that bought and held as cash-based
The pennies-per-transaction that they charge for their
services add up to billions of dollars in profits each year. For
example, an investor that bought shares of MA in May of 2006 has
earned a gain of 1,700%.
Electronic transaction processors are in a lucrative business.
They generate a ton of cash. That's why companies with large user
), are thinking about getting into the business.
Apple has access to millions of users through iTunes. And when
it looks at privately held companies like Square and Stripe,
which are seeing their market values surge, the temptation to
introduce its own version of PayPal grows harder to ignore. The
reports that, based on the latest rounds of funding, Square is
valued at $5 billion while Stripe is valued at $1.75 billion.
EBay's PayPal is growing briskly. In 2013 sales of the unit
grew by 19% to $6.6 billion. And mobile payments outside of
parent company eBay grew by 128%.
has a position in eBay (and Apple for that matter) and, because
of PayPal's potential, calls a spin out of the unit a "no
brainer". I think it's fair to say that a similar payment unit
within Apple and Google could make sense (to be clear, both
companies have worked on this).
I won't ever invest in Bitcoin instead of EBAY, AAPL, GOOG, V
or MA. All of these companies have very real potential to make a
lot of money (i.e. dollars) in the virtual currency market. Some
of them already do.
Why did Google just invest $60 million in this
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