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MBPT Spotlight: Digital Currency Is Something Agencies Should Look Into - Broadcasting & Cable

MBPT Spotlight: Digital Currency Is Something Agencies Should Look Into

For better or worse, our creative world is fragmenting.
Large companies concentrated in a few major cities are being eclipsed by
constellations of specialized creative teams. Agencies in search of the best
studio partners are finding them around the world—and studios are building international
teams of artists.

But when it comes to getting creative partners paid, the
global financial system hasn't kept up. International money transfers are
expensive, slow and generally a hassle for agency and production firms alike.
Many countries, especially in the developing world, have capital controls that
make it even more difficult for artists to convert foreign payments into the
local currency.

As a result, advertising agencies, studios and artists are
often forced into options that are expensive (i.e. PayPal) or extremely
cumbersome (foreign bank accounts). It shouldn't be this difficult.

Enter Digital Currencies

But there is an emerging solution. Digital currencies—such
as Bitcoin, LiteCoin and Ripple—completely reimagine the financial system to
take advantage of a globalized, ubiquitous digital infrastructure. Its
ambitious goal: make it easier to get paid anywhere in the world with much less
hassle.

Even though these systems may not be ready for primetime, it's
something global agencies and artists working internationally should keep an
eye on.

Digital currency has several important advantages over the
current systems.

First, transfers are fast; they take only a few minutes to
complete vs. the hours or days that are the norm for bank wires.

Second, it's inexpensive; fees are several orders of
magnitude cheaper than bank wires or PayPal.

Third, digital currency incorporates strong cryptographic
protection that makes transfers anonymous, which is something to consider in
light of the current atmosphere of government surveillance.

Finally, digital currency is immune to the capital controls
that plague many developing countries.

It's important to be aware, however, that this is a work in
progress, and that means there are rough edges ahead. Converting from digital
currency to dollars, euros, pesos, etc. is still harder than it should be, and is
the major weakness that needs to be addressed to create a viable system.

Digital currency itself, however, is increasingly being
accepted for purchases. Everyone from online retailers to bars in Berlin can
now be paid in Bitcoins, making it possible to simply avoid the problem in some
cases.

Exchange Rates Still Volatile

The exchange rates between digital currencies like Bitcoin
and real currencies can still be extremely volatile. But as the digital economy
grows, the market will become increasingly liquid, leaving fewer wild swings.
This is also less of a concern when using digital currency for short-term
transfers (remembering that digital transfers typically take only a few
minutes).

In fact, digital currency is similar to cash in several ways
-- one of which is that it's up to you to keep track of it. If you lose the
file, or forget your cryptographic key, it's gone. There's no bank to call for
customer service.

Today, digital currency is a promising idea. No longer
purely experimental -- but also not quite mainstream -- it represents a cool
attempt to bring the ideas of open architectures, distributed networks and
cryptographic protection to money. In the larger perspective, it represents a
shift away from global dominance by governments and banking conglomerates to a
distributed financial system.

Why is this important? While digital currency is most
definitely not for everyone today, it's something we should all keep an eye on.
Digital currency can become a faster, cheaper, more secure way for agencies and
studios to get paid for international work. And our industry is, for better or
worse, heading in that direction.

To learn more, check out these links:

Bitcoin
LiteCoin
Ripple

Invisible Light
Network is an integrated creative studio involved in unique motion design,
interactive work and short films. Clients include UNICEF, Vitamin Water and GE.
Blanchard can be reached at
Elliot@invisiblelightnetwork.com.

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