Virtual Currency: How to Use It Now

The very real opportunity for e-commerce in developing markets using not-so-real currencies like Bitcoin and Ripple

Written by Russ Martin for Marketing Magazine

As CEO and co-founder of OpenCoin, Chris Larsen is one of the leading forces pushing for innovation in the way consumers make payments.

On Ripple, OpenCoin’s exchange system, consumers can make payments using virtual currencies including its namesake Ripples currency and bitcoin, which drew headlines this spring when its value surged and caught the attention of Wall Street.

Given the hype surrounding bitcoin, Marketing Magazine spoke with Larsen ahead of Grow Conference in Vancouver (August 14-15), where Larsen is speaking about the future of money, what’s led to consumers’ desire for virtual currencies, how they could affect e-commerce and whether he sees a future where Walmart accepts bitcoin.

Your exchange system, Ripple, lets consumers make payments with virtual currencies like bitcoin. What’s driving consumers’ interest in virtual currencies?

Virtual currencies were born out of an eroding trust in the core value of traditional currencies coming out of the financial crisis. I think that has given the industry some lift, but people are realizing these new payment systems are totally global and could do for the movement of money what the internet has done for the movement of information.

As more transactions happen online, does the need for a virtual currency increase?

Absolutely. There is a march to get finance to work like the exchange of information does. It’s been frustratingly slow, but people are now waking up to the fact that the virtual currency movement is about flattening finance the way information has been flattened.

It’s easy to imagine small businesses and brands in the tech space using virtual currencies, but what about big retailers like Target or Walmart?

The bigger players are all aware of it and watching it. Everyone wants to see what happens next. It will be the smaller, more innovative companies that will try it first and, if that works out well, the bigger folks will follow.

Ripple lets consumers make transactions with both traditional and virtual currencies. Why did you choose to accept both?

Exchange systems have to, by their nature, accept any currency and be currency agnostic rather than forcing everyone to adapt a single currency. We see our new virtual currency, Ripples, as an enabler of a multi currency system rather than the centre piece itself. We think of Ripple as a transactional web protocol. As such, it should be as flexible and universal as possible.

Do you think there is a fear factor holding some consumers back from using virtual currencies?

Back in, say, 1996, people thought there was no way in the world anyone would do anything with finance on the internet. Years later, that has completely changed. Similarly, virtual currencies started out about four years ago and seemed like the craziest idea ever. Now you’re seeing a lot of banks exploring it. I think it’s going to be a process before banks start transacting in virtual currencies, but I can see it happening.

Who is using your exchange system more right now €“ consumers or businesses?

The biggest need right now is for cross-border transactions and remittance as well as huge parts of the world that have access to the web, but not to transactions. That’s where the most obvious need is first €“ cross-border transactions €“ then in the developing world where payment options are expensive or you have a lot of people who are paying too much to move money.

Where do you see the biggest opportunities in this space?

If you think about the number of people in China, for example, who have access to any market now through their phones but don’t have an easy way to pay in our cash-based society, suddenly have the ability to engage in e-commerce anywhere. That could be tremendously powerful to e-commerce companies selling to the developing world, simply because they now have a much bigger global audience.

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