There’s talk that Amazon will soon be accepting payments in Bitcoin and although I haven’t personally come across one yet, there are reportedly many small businesses out there accepting cryptocurrency.
It’s a fact that Microsoft, Bloomberg, Expedia, Virgin, Subway (yes, the sandwich people) and WordPress already accept Bitcoin as payment.
Should you … would you … trade in Bitcoin or similar in your business dealings?
That’s a big question that I would not dare give a definitive answer to, but it’s possible (if not probable) that at some point all businesses will be forced to transact in cryptocurrencies to survive.
THE BITCOIN STORY
It all began as something rather obscure and geeky, but of course in recent weeks the media has been flooded with stories of Bitcoin hitting new highs and instant billionaires being made (those who invested in the currency early on in its evolution).
Now, as the value soars, so does the speculation about whether this trend can continue before the bubble bursts.
If you’re not sure what this phenomenon is all about, let me try to enlighten you (though it’s very difficult to understand the concept thoroughly!).
Bitcoin, the original cryptocurrency, was “invented” as open source software in 2009. The originator was believed to be a Japanese man named Satoshi Nakamoto, but the man himself has consistently denied this fact.
The value of a Bitcoin unit was initially $0, but since then it has risen (with a few fluctuations), until it hit the headlines this week as having breached the $15,000 mark. If you invested when Bitcoin was selling for, say, $10 a unit, you’d certainly be smiling now!
What many of us find hard to grasp is that Bitcoin (and other cryptocurrencies like Ethereum, Litecoin, Ripple, and the newest one, Iota) are not hard cash in the accepted sense of the word. There is no actual coin – just a piece of computer code residing somewhere in cyberspace. Unlike traditional currency, there is no stash of gold in a vault somewhere to back up the value of the notes and coins issued.
This means that the currency is decentralised, and not controlled by any government or commercial regulation. Essentially, transacting with Bitcoin cuts out the middle man and involvement of any financial institution.
MINING
Where does the supply of Bitcoin come from? They are created by people called “miners” who put them into the “blockchain” after solving incredibly complicated computer maths problems, which use up a huge amount of power. The Bitcoin enter the chain and can be bought from exchanges that swop them for regular currency. You can also, of course, choose to accept them as payment for your goods and services.
The reason the value of Bitcoin is rising is that the inventor designed the software to ensure the flow of Bitcoin will stop when 21 million exist. There are currently around 16 million, so the cap is not far off. In theory the scarcity will continue to drive up the value.
It gets even more complicated if you try to fathom out the second generation cryptocurrencies with more advanced functions that are already emerging.
Back to what it means for your business to accept payment in Bitcoin.
When you receive Bitcoin, you can be sure you are totally in control of your money. It does not need to be deposited in a bank, and be subject to any bank charges. It is also more secure than it would be in a bank. All transactions can be made instantly, anonymously and securely, with no payment provider to take a fee.
It’s especially in security that Bitcoin transactions score well. It’s all down to your Bitcoin wallet being stored within the Blockchain technology, which is apparently impossible to penetrate.
Cryptocurrency is definitely the finance of the future; it’s all part of the new industrial revolution that is disrupting every facet of the business world. As a business owner, you can’t afford to ignore it, so you’d be wise to learn all you can, as soon as you can.