I know I’ve been a little late on the bandwagon here, but I’ve only just recently heard about Bitcoin and the surrounding buzz. Nobody I know has ever used it (and most haven’t heard about it, either) so I’ve been curious about what it is and how it works and why people are getting so worked up about it.
From what I understand, basically Bitcoins are like poker chips. They’re like money, but they’re pretty much worthless outside of its accepted dealers. Bitcoin currency is used primarily for transactions between individuals because it cuts out the middle man. I can send a bunch of Bitcoins to my friend who can then cash them in for real money, and they won’t have to go through a bank and lose some of that money in bank charges. It’s also handy for international exchanges, because it can be converted to many different types of currency, so people don’t have to go through the hassle of converting their money when they send or receive payments or gifts.
Some companies, though, are catching on to this trend early and are starting to see the benefits of accepting Bitcoin. According to Gyft, an online gift card marketer, Bitcoin users outnumbered credit card users on Black Friday. If that’s 100% true or not I’m not entirely sure, but if it is it’s pretty remarkable. Apparently more and more retailers are accepting Bitcoin as a substitute for cash or credit cards, which I guess makes sense if so many people are Bitcoin users.
There are some advantages of using Bitcoin over cash or credit cards, such as the fact that it seems more secure for making payments. Especially in the wake of the massive Target security breach, people may be more concerned about using their credit cards–even at major retailers. With Bitcoin, online or in-store purchases are paid for directly from the buyer’s Bitcoin account, not the credit card account. It’s similar to using a debit card, but instead of linking it to a bank account, it’s linked to a Bitcoin account.
But not everyone is convinced about its usefulness and longevity. Using a completely digital form of currency is new and frightening to some people because it could undermine the value of the dollar and cause major economic problems. So maybe the world isn’t quite ready yet for a full transition to digital currency, and perhaps Bitcoin should be kept on a smaller scale. But the fact that Bitcoin is as popular as it is I think is a testament to how far we’ve come and how comfortable we are with advancing technology.
Do you use Bitcoin? Do you think it will continue to rise in popularity or will it fizzle out over the next few years?