The Nature of Bitcoin and Its Practical Applications In Business
To know how Bitcoin can be used in businesses one should know the nature of Bitcoins. Bitcoin is a decentralized digital payment system that was launched as open-source software in 2009. It was mentioned in a paper released by Satoshi Nakamoto. Bitcoin refers to a peer-to-peer network payment system where transactions are conducted and encrypted between parties anonymously bypassing third party intermediaries like banks or governments.
Bitcoin uses a cryptographic proof protocol that lets parties conduct transactions without involving any middleman. The interactions between traditional currencies and Bitcoins are not completely regulated by laws. But, at the same time, Bitcoin can be used for businesses and it can also be accepted as payment by businesses. Since 2012, well-known websites like OkCupid, WordPress, Microsoft and Overstock.com have been accepting payments in Bitcoins. The very first Bitcoin ATM was set up in 2013 in Canada and there are hundreds of ATM machines spread all over the world in places like New York and Los Angeles.
Since money is a medium of exchange or measure of value, in that sense, Bitcoin is like money because it has value. You can exchange the Bitcoin for fiat currencies like the Euro or USD. Given that Bitcoins have some advantages and disadvantages compared to traditional money, businesses should ideally weigh the pros and cons before incorporating Bitcoins into their operations.
Bitcoin does not need a payer or payee to be physically present. So, costs of transactions will be far less than if you were to use traditional currency or paper money. Bitcoin transactions need a wallet for storing the coins and there are randomly-generated numbers that act like public or private keys. All transactions entail low charges since payments happen directly without third parties. Exchanging between traditional currencies generally involve many costs.
As users, you will not need a PayPal account or bank account to start paying Bitcoins. You simply need web connectivity to get started. Even as sellers, you do not need any special equipment or hardware like payment terminals. Bitcoin transactions are much faster than bank transfers or PayPal transfers because of the absence of middlemen. There is no paper trail in Bitcoin transactions; only a digital trail that is almost untraceable.
When you have decided to use Bitcoin for your business, your brand name will be displayed on Bitcoin websites. This helps Bitcoin owners to know which merchants have started accepting Bitcoin payments. So, this works to advertise your business even further at no extra cost. It can even help your business transcend international borders because thus digital currency is not tied to any fiat currency. Furthermore, since there is a definite supply of Bitcoins, there is not likely to be any inflation issue. As Bitcoins can be subdivided up to 8 decimal points, each of which is a Satoshi, sellers and buyers have enough flexibility in bartering and sales.
In the past decade, businesses have witnessed huge price spikes and falls of Bitcoins and hacking of crypto exchanges. While Bitcoins may not have the potential to completely overthrow traditional currencies, it can work like a complementary currency. Many critics feel that the Bitcoin bubble will eventually burst and it may be rendered useless in time. So, every business owner should analyze the benefits and drawbacks of using Bitcoins for their businesses before dabbling in it.