Even if you do not have a Bitcoin account, or “wallet,” you may already be paying for things with virtual currency. Have you ever used Amazon coins to buy a Kindle app? Is there any chance you paid for that morning coffee with Starbucks’s Star codes?
Bitcoin has been one of the hottest topics in business over the last year, but what does it mean for your business?
First, Some Background
As described in a recent TED Talk on Bitcoin, currency, at its essence, is an expression of value. That means that if society starts assigning value to items other than government-issued money, those things then become a type of currency.
Bitcoin exists as digital information rather than cash. According to the Christian Science Monitor, “each bitcoin is a string of mathematically generated numbers. This sequence can be printed on a piece of paper or embedded in a coin, as a physical reminder, but it is the number, not the object (as in other currency), that has value.” People who want to purchase Bitcoins can go to an online exchange service to convert their cash into Bitcoins.
Growing in Popularity – In a Massive Way
It may be hard to fathom, but Bitcoin was the world’s best-performing currency last year. Forbes called it the best investment of 2013. And because Bitcoin is run on a peer-to-peer network, it is popular worldwide for all kinds of illicit transactions.
But do not let that give you the idea that Bitcoin and its competitors, such as Dogecoin and Peercoin, are just for criminals. Cryptocurrencies are going mainstream, as major retailers have started accepting Bitcoin for payments online and at cash registers.
With its popularity among the tech crowd and millennials, Bitcoin is likely to gain even more steam in the coming years, and that means your business needs to pay attention to new developments in the virtual currency world.
Who is in Charge?
Bitcoin and many other cryptocurrencies are open source, which means, essentially, that no one is in charge.
However, the U.S. Senate has recently formed a task force to look into monitoring and regulating virtual currency transactions to protect consumers from fraud and other illegal activity.
The upshot: Bitcoin and other cryptocurrencies may soon command enough power that companies may have to start handling those accounts in the same way they handle traditional monetary accounts.
Contact us at 215.441.4600 if you have questions or would like to discuss how this topic may impact your business.