Illustration of bitcoin entering a cell phone screen
By Kevin Brennan May 16 2013

Can I Pay for This In Bitcoin?

Huh? Bitcoin? What?
Quick recap: Bitcoin started in 2009 by a hacker who calls him or herself Satoshi Nakamoto (and who might be several people). It’s a form of decentralized virtual currency used to buy goods and services online. By internet standards, it’s still an odd and super nerdy phenomenon. Bitcoin is a byproduct of software and computer networks looking at the concept of currency and asking the question, “How can we create a new economy?”

How does one earn bitcoins?
Anyone armed with a computer can download Bitcoin’s software and theoretically mine for bitcoins. The bitcoins serve merely as a form of payment for using your computer’s resources to solve difficult math problems. The more computing power dedicated to solving the virtual puzzle, the better chance you’d have at earning bitcoins. Once you earn bitcoins you would transfer them to a digital wallet where you could exchange them for goods, services or even back into a local currency for a very low fee. Alternatively, you can exchange cash for Bitcoins for a very low fee
(often 1% or less) and then go about exchanging them for goods or services over the net,
avoiding the entire “mining” process all together.

Why should you care?
Bitcoin has reached a tipping point where people are genuinely considering placing a piece of their real-world wealth into a virtual economy backed only by trust in this unproven, unregulated system. In the past week, some well-known venture capital firms placed millions of dollars as investments into companies that run Bitcoin exchanges and the rate at which Bitcoins are being exchanged has been growing on average 15% per week. The implications of what this could mean for business is currently unclear, however it offers a solution to immediately reduce the cost associated with accepting credit cards or transferring payments.

Whether you see it as all hype or a legitimate institution, Bitcoin is gaining momentum and now has a real case for our attention. At minimum, go ahead and marvel at how a virtual currency that appeared practically out of thin air just created a billion-dollar market that is for the moment, free of government control.

Have you jumped into bitcoin yet? We’d love to hear about your experience.