Portions of this article were used in the following article published in the Huffington Post:
If you’re anywhere that isn’t under a rock, you’ve heard of BitCoin. Many companies actively take BitCoin and the user response phenomenal. This goes to show that a standardized credit based free-trade form of currency is something that is not only in demand but needed. Like any new technology, there are sure to be bumps in the road. This statement holds true especially when dealing with a technology that could shake the foundation on how people exchange currency and do business altogether.
One thing is for certain, those that jump on the BitCoin bandwagon are pioneers in the new way that the world will eventually be doing business. There will be no more popping open the currency exchange websites to get an approximate conversion rate from your American Dollars to Great Britain Pounds. Traveling abroad will no longer mean carrying a portable chart of conversion rates. You will simply log in and trade your electronic currency and in all honesty, this scares the hell out of the world banking industry.
This is only a speculation, of course, but the fact remains that under rather interesting circumstances some BitCoin exchange services have been falling under fire. With the arrest of Bitinstant CEO, Charlie Shrem for money laundering and the most recent shutdown of Mt Cox, this is cause for concern over the reliability of BitCoin as a substantial method of currency exchange. You can bet all your BitCoin stock that the big wigs of the world’s largest banks are far from shedding the slightest of tears. If anything, it only fuels their fire.
Those who are invested in BitCoin in some way or another shouldn’t worry, though. Let’s keep in mind that these are exchange services that operate like banks and not the system itself. Just as in banking, you’re going to have people that are going exploit the naivety of others. The difference is that banks extort the money through carefully regulated means. BitCoin, as a form of currency and a technology is a fairly new concept. There are sure to be a few glitches that will certainly be cause for concern but are far from being the destruction of the free exchange currency system.
One of those glitches is with security. Whenever you deal with currency of any kind, it’s certainly a topic of discussion. Online technologies are always subject to scrutiny because of this. Recently, the “Pony” Botnet attacked and stole the contents of several BitCoin wallets. The number was 85 to count. Most certainly this means the end of the currency, right? Think again. BitCoin claims hold of nearly 1.3 million wallets. You would have to be a math genius to factor the microscopic percentage of those who lost their wallets in that breach of security.
Let us not forget that this past holiday season, the information from millions of debit cards users were high jacked from major corporate retail establishments. This forced banking giants like Chase Manhattan to have to automatically reissue cards to a countless (and unreleased) amount of customers. You can applaud the bank for taking a proactive stance on customer service but the fact still remains that they let this occur. Putting this into perspective, the BitCoin incident doesn’t seem all that major.
Companies that utilize BitCoin would be doing themselves a favor in using the currency. Online retailers like Overstock.com have boarded that BitCoin train with wild success. In their first day of using the currency, they reported $126,000 in sales at the close of the business day. This was impressive enough for many of the investors and media outlets sitting in the bleachers to take notice. Amidst the scrutiny that surrounds the currency, this kind of profit seems to prove that at the very least that accepting BitCoin could find itself a great niche market until it becomes a mainstream technology.
The key to this market is in knowing who your market is. BitCoin is technology based and those who are waning on how the currency operates are likely not going to utilize it until it becomes a mainstay in payment options. Online transfer systems like PayPal took several years to become the standard and even then, it took a partnership with parent technology EBay to push it forward. This kind of partnership is exactly what BitCoin will need to remove the doubt from those who are still very unsure.
The partnership needed won’t come out of the ether, though. It is acquired by generated interest. This is where businesses and personal users come into play. Since the currency is regulated by those who utilize it, this is crucial to its acceptance. Many smaller businesses are already exploring the use of BitCoin as an option for payment for services and goods. Like Overstock.com, an ample security platform should already be put into place. Forward thinking companies with a stout data security infrastructure (Amazon, we’re looking at you!) should be leading the pack in the acceptance of BitCoin as a common currency.
With any innovative technology, there comes a learning curve with not only users but the technology itself. Just as the online music exchange that was Napster inherently revolutionized the way people got their music, so will BitCoin in how people pay for items and services. This kind of alternative to monetary currency is still very much in the development stages but could prove to be a powerhouse in the years to come. Companies that are in on this revolution will find themselves taking part of history in the making and there isn’t a price on this kind of publicity that can ever be bought with a dollar.