Here is Bitcoin’s definition off of their website:
Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of Bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
In other words, Bitcoin is not controlled by any government and is decentralized electronic currency. The way Bitcoins come to life is fascinating and can be a separate article in itself. Think of how currency works today. We are surrounded by fees, issued by banks, profited in the financial markets and controlled by the government. All that goes away with Bitcoin....
An example to think about is international currency. When you travel or buy items from another country, you have to worry about exchange rates and fees. If something is worth 5 Bitcoins, you do not have to worry about exchange rates or fees. A Bitcoin is equal in the United States, China, Italy, Russia, Egypt, Israel, etc. Bitcoin is already used by over 100,000 people all over the world. It is a startup currency which has never happened before.
The advantage for businesses to accept Bitcoin are lower fees than credit card companies, better protection against fraud, fast international payments, no PCI compliance required and more.
Bitcoin has had ties to illicit activities. In 2013 the FBI shut down a black market site, Silk Road and seized 144,000 Bitcoins (worth $28.5 million). The US is considered Bitcoin friendly where other governments are not and they are restricting Bitcoin exchange for currency.
When I read the article concerning Silk Road, it got me thinking of two other technologies that became popular due to underground activity. Although not exactly the same since one is legal and the other illegal but hopefully you can see the resemblance.
In the 80’s Betamax and VHS were trying to become the standard cassette player. VHS won the war and became mainstream because the adult entertainment industry decided to distribute materials in VHS. The adult entertainment industry was also instrumental for the internet as we know it today and high speed lines. Some of the technologies we use today did not start out as mainstream but became so over time.
Two companies have recently announced the acceptance of Bitcoin, The Sacramento Kings of the NBA and Overstock.com. Is this the start of Bitcoin being accepted as currency for B to C and B to B?
Bitcoin or something like it will become part of our business and personal life at some point in time. It is worth keeping an eye on and may open up new doors for doing business with people or companies that you are not doing business with today.
