In its current form, the answer is no, but there’s potential, and that is something I am watching with great interest.
Ersek’s biggest criticism of virtual currencies is pragmatic: Once you transfer the funds, what then? If few places accept virtual currencies, and there’s no way to convert them to local currency, how useful is the transfer to the receiver?
Will the person receiving digital currency in a rural village in the Philippines be able to use it? Will the small or medium-sized enterprise have the technology capacity to spend, or transfer it? And most importantly, does the receive-side consumer or business actually want digital currency — if given the choice, would they prefer cash, or want the money in their bank accounts?
While a valid criticism of virtual currencies at the moment, the explosion in bitcoin-accepting businesses and the boom in bitcoin ATMs may soon make Ersek’s points moot. Some of his perspective is also rooted in the questionable assumption that the world’s populace actually trusts existing financial institutions, rather than using them because of a lack of alternatives.
Furthermore, the transfer of funds is an emotional transaction, and when you are dealing with payments of any kind, trust is a major factor. While digital currency has potential to enhance customer and business trust, several recent events within the space underscore the early-stage development of the technology. Without continued enhancements to ensure consumer protection, which ultimately translates to increased reliability, I believe consumers and businesses will continue to gravitate to cash, bank accounts, and cards.
Perhaps the most interesting element of Ersek’s article is simply that it exists at all. Western Union is clearly keeping an eye on the virtual currency movement, and that the subject is important enough to merit a discussion by the company’s CEO is extremely telling. Much like how Craigslist is credited with the rapid decline in newspaper publishing, bitcoin has the possibility to dramatically change the money transfer business. Ersek, for all his skepticism, is clearly aware that virtual currency isn’t just a passing fad.