The obligatory stock-image of Bitcoins, stacked tall like Poker chips.I have been researching Bitcoin for a few months now and have been watching the rise, sudden fall and, currently, the slow re-rising of it’s value again.
Have I bought some Bitcoin? Yes. Not a fantastic amount, but enough to understand the process and relate theory to practise.
Have I spent them anywhere yet? Well, no, but read on.
Am I sure that our parents will all have Bitcoin wallets on their smartphones tomorrow? Possibly not, but maybe soon.
- “It’s going to take over the world.”
If you think Bitcoin is going to take over the world and replace all other currencies, then in my opinion, you might well be mistaken. True, it has every chance of making it as an international commodity for buying and selling online, as that’s exactly what it was designed to do.
Sure, there are some countries, such as China and India so far, that have made their views and comments heard about Bitcoin and this has, quite obviously, made an impact on the rate of the Bitcoin. When China announced itself to it’s banks, the rate of Bitcoin plummeted almost overnight to almost half it’s value, as it is now easy to see quite how much interest China’s people had in the use of Bitcoin. As they sold quickly, the price dropped fast.
- “Drug dealers and ‘bad people’ use it.” True. They did, and this is proved by the findings of the Silk Road website, as they took Bitcoin in exchange for drugs and so forth. But drug dealers and ‘bad people’ also use cars and carry regular currency, and much more frequently at that, so it’s worth putting a little perspective on the situation, too.
I am not going to condone selling drugs or anything like that, but there almost has to be a little bit of advertising of Bitcoin to the masses by the guys at Silk Road; Would my parents have heard the term as much if it wasn’t plastered all over the news and airwaves about the ‘dark side of the internet’ if they were doing their transactions using a Paypal account, or accepting Visa online like everyone else? I doubt it, hence my thinking that Silk Road obviously dented the name of the cryptocurrency, but much more people are familiar with it’s concept as a result.
- “The value could drop again at any moment.”
Again, true. Thinking about it, so could the value of a lot of things that we already take for granted. Savings, investments and property prices are just some of the things that already spring to mind. Again, it’s all about perspective, and as we already have seen, house prices across the world were slashed during the recent recession, yet we are all fixated on them and are eagerly awaiting the rise of the property prices to help rebuild the economy.
Also, from my perspective, it depends on what you see Bitcoin being for, as to whether you’re even interested in the rate or value of a single coin; for instance, if you’re buying into Bitcoin at a lower rate in the hope of holding onto them for a while and selling them on at a higher rate. then yes, I agree that the rate would be very interesting to you, especially in such a young and volatile time for it.
But if you’re a merchant, as in you’re selling goods online in order to make a living, then I would argue that the rate of Bitcoin is almost irrelevant, as the sooner you ‘cash-in’ your coins to convert them back to regular currency in order to pay the rent or mortgage, the better. So, if you’re a burger vendor in London accepting Bitcoin, the chances are that you’d want your coins back almost as soon as you possibly could. I mean, this would almost certainly be the strategy if you were accepting payment via Paypal, wouldn’t it? Credit card payments still resolve back down to 1’s and 0’s in a bank account somewhere.
- “Other people have already made their money in Bitcoin.”
Bitcoin is still very new to the wider world, even though it’s been developing for a while now, and some there have been a handful of news stories of people that have had a chance to get in early, some even several years ago, and are now being able to cash-out to make a considerable difference with their investment.
But isn’t this the case across many other walks of life?
>> Property developers buy houses and flats off-plan to get a cheaper deal, hoping that when the building work is complete, the property has already gone up in value and has already added equity to the house.
>> Venture Capitalists want ‘in’ on businesses before they get popular as they, too, want to buy low and sell high.
>> Some collectors of art buy paintings and store them hidden away. And so on and so on.
In each of these situations, money is risked when the stakes are relatively low and then the higher value is realised at sale later. And just because a house is currently worth £200,000 now doesn’t mean that in ten or twenty years’ time it won’t be worth £300,000. Just look back at property prices from when you first bought your house, or even further back.
- “What if I’m an IT worker and I forget about my Bitcoins and throw my laptop out in the dump which are worth £4M?”
There’s a dozen different ways you could lose money. Carelessness is not an excuse.
My thoughts on this particular matter, is if this chap really is an IT worker, and had spent all that time mining for the 7500 coins he claims, regardless of how long ago this was, then he really ought to not only have the IT-sense to look after a laptop with personal data on it AND have the data backed up, but should also have looked after his hard work a little better, no?
Besides, what IT worker in the world throws away a hard drive without scrubbing it first?? Not one I ever what to work with!
- “It’s a scam. It’s a pyramid scheme!!” Who knows. Maybe it is. There’s always someone else out there making money whether you or I succeed or not. The scale of this ‘scam’ would indeed make it a fantastic, highly publicised scam in the world. I’m not saying “jump in, feet first”. Far from it, in fact. I’m saying that there could actually be some merit in this new way of purchasing items, particularly if you’re buying/selling across different countries.
- “Where can I even spend Bitcoin, assuming I had some??” That’s a good point, in all fairness. But probably more than you might give it credit for. The occasional news items on TV might bring to your attention the fact that a bar in London will sell you beers for Bitcoin. But this is only really a news item because it’s not yet a conventional currency. What fantastic national, or even international, publicity is that for the pub? But to answer the question, there’s actually a website that is trying to help pin-point the establishments across the world that will accept Bitcoin for it’s goods.
- “It’s not secure.”
Yes. That’s right. It’s not secure. It’s not safe, or anything. In fact, why not use your debit card instead to make those online payments. You know, the same debit card for the account where your wages get paid into. That one. That’s much safer, isn’t it?
Despite my irony and sarcasm, why do we feel ‘safer’ typing in a credit card number into a webpage? Key loggers are, what, £20 online? And they’re available to almost anyone with a credit card! Or even better, Malware/Spyware is free! …if you’re unlucky enough to contract some online.
And who’s to say what’s on the other end of the web-page, where your credit card number is being stored?? In many of the major countries, PCI-DSS compliance is helping to ensure that operators that accept credit card-based payments, either online, in-person or over the phone, are handling the customer details properly, and ensuring that the websites and back-end services are up-to-speed in terms of patches and securities. And this is me speaking of having to adhere to those rules for the company at which I used to work. But where else are those website being run from? And are they the real websites anyway? How do you really know that they’re not billing you for a hundred times the amount you entered on that ‘safe’ little web-page?
To come at this question from the Bitcoin argument, for and against, the use of Bitcoin could be argued either way. There are articles online of people having their Bitcoins stolen by malware thieves, who have hacked into an unprotected PC and simply transferred the money away. But is that any different to leaving cash, or a credit/debit card laying around? Maybe not, but we still do that, too.
But in regards to Bitcoin itself, during the act of transfer the payment is validated to check for spoof or invalid transactions, trapping for faults of mis-payments to incorrect accounts, which is something that our banks are a little poor at themselves. There’s a little confusion that I’ve come across myself, in that payments by Bitcoin are done anonymously and this is a problem. Well, possibly, but again, bringing perspective and reality back into the equation, how do you know who that taxi driver really is? Or that man you just bought a newspaper from? My best argument is that you own the money, in whichever currency you prefer it to be in; if you can’t be trusted to look after it, then don’t.
All this is good fun to discuss and it’s also easy to argue a case back and forth, for the pro’s and con’s of anything like that. My interest comes from not investing a large amount of money for the sake of seeing it increase or decrease. Instead, I am looking at from a software development perspective, as this is my regular view on life. Is this worth using? How easy is it to use as a customer? What about as a merchant? Is all of the lingo an unnecessary barrier to entry??
More years ago than I can remember, I was investigating Paypal and seeing how to integrate it into a shopping basket for use on a website for the sale of goods. Back then, Paypal was a dirty word, just Bitcoin can be portrayed as now. There were no readily available templated-shopping baskets that could be simply dropped onto a webpage to allow it’s use instead of credit cards. Not enough people had heard about Paypal to make it even worth thinking it was going to be any different to the likes of NoChex or e-Gold at the time.
Fast forward to today, and Paypal is (almost) a household word. Heck, my dad even uses it (a lot!), which is on (and even away from) his beloved eBay, in order to sell his wares to people in this country and beyond.
So, why can’t Bitcoin be like that?
Why can’t I already ‘see’ an array of e-commerce templates, boasting Credit Card and Paypal payments, in addition to Bitcoin?
Why wouldn’t they even promote Bitcoin over the other alternatives? The merchant of the goods may even prefer it due to low costs and transaction fees, as opposed to the relatively high charges imposed by other forms of payment? Looking at you, Paypal! Paypal’s rates are great for the young start-ups, with no monthly tie-ins, but they soon earn their money when the money starts coming in.
My biggest niggle with the Bitcoining operations in effect at the moment, are that they’re still lacking that touch of ‘ease’ that Paypal have struggled to find and now reaping the rewards. I’m talking about the thin layer of gloss that makes the payment part almost transparent, as let’s be honest, we don’t shop somewhere primarily because of the currency that they accept. In some cases, I’ve been to websites and bailed-out of the purchase at the shopping basket entirely as the payment steps are too complicated or cumbersome to deal with.
In my eyes, the payment stage should be the last part to a happy purchase. Imagine if you were fortunate enough to buy a Ferrari or Lamborghini; imagine that you had been and chosen the exact model and extras that you’d like and then you get to the payment stage, and the dealer only accepts payments by Western Union transfer, in many transactions of small amounts. It just becomes more effort than going somewhere else and starting again, as internet surfers are probably the most fickle people in the world. Just ask yourself how long you wait for a webpage to load before you click the ‘back’ button and go elsewhere!
I think that when more business-minded, or even Marketing-minded, people pick up the notion of Bitcoin as a valid form of payment, the steps to a thin layer of gloss will begin to form and soon, there’ll be a payment gateway on every website that can offer payment from a mobile device with so little effort that my mum can do it without getting flustered or confused about the transaction, and without panic attacks of imagining her life’s savings being transferred to the man at the green grocer’s shop. If we can’t get to that stage, whereby the user interface of it all is drop-dead easy to use, then it’ll take a long time.
The flip-side to the same view-point, is that if the green grocer can’t transfer his day’s takings back into the regular tokens of money that his mortgage provider will accept, and be able to do this at ease and on a regular basis, then there’s little scope for him to take-up the payment mechanism just for the chance of a lower transaction fee.
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