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Can you get your head around the new currency that 30 architecture firms worldwide and five U.S. churches are now using?
Its use is not exactly widespread, and the technology is both emerging and can be difficult to comprehend.
But the use of cryptocurrency as an alternative to cash and existing conventional electronic payment systems is generating a fair amount of interest.
A cryptocurrency is defined by the Oxford Dictionaries as “A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.”
There are a number of cryptocurrency systems in use throughout the world. The best-known and most widespread is the Bitcoin network.
There are a number of cryptocurrency systems in use throughout the world. The best-known and most widespread is the Bitcoin network.
The first implementation of a cryptocurrency, Bitcoin originated in 2009 with a white paper published by one “Satoshi Nakamoto,” according to Bitcoin.org, an independent, open-source project, created by Bitcoin’s original developers, that is “dedicated to help Bitcoin to develop in a sustainable way.”
Today, that organization’s website (https://bitcoin.org) serves as a source of information for users on all things Bitcoin, utilizing input from contributors worldwide. The site points out that “Nobody owns the Bitcoin network, much like no one owns the technology behind email. Bitcoin is controlled by all Bitcoin users around the world.”
How it works
Businesses and individuals using Bitcoin utilize special software, in the form of either a mobile app or a computer program, known as a “Bitcoin Wallet,” that allows them to engage in transactions involving Bitcoin.
The wallet software enables users to share in the key to the workings of the Bitcoin network – a public ledger called the "blockchain.” This is a data file that carries the records of all past Bitcoin transactions, including the creation of new Bitcoin units.
The blockchain digital ledger basically takes the place of a typical central transaction clearinghouse – most often a bank of some sort – that ensures, among other things, that “double spending,” i.e., spending the same Bitcoin in more than one transaction at the same time, does not take place.
According to “A Short Introduction to the World of Cryptocurrencies,” an article in "The Federal Reserve Bank of St. Louis First Quarter 2018 Review," this ledger contains every Bitcoin transaction ever processed, allowing a user's computer to verify the validity of each transaction.
The article adds that “The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins from their own Bitcoin addresses.”
As explained on bitcoin.org, businesses or other entities that wish to utilize the Bitcoin network in buying or selling goods or services start out by downloading their Bitcoin wallet, of which there are a number available from different vendors. The next step for most is to open an account at one of many Bitcoin exchanges, using conventional funds (such as U.S. Dollars) to buy Bitcoin units.
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How do you spend your Bitcoin? “Bitcoin payments are easier to make than debit or credit card purchases, and can be received without a merchant account,” according to bitcoin.org. Payments are made from your wallet, which is located on either your computer or smartphone, by entering the recipient's address and payment amount, and then hitting the “send” button.
Who accepts Bitcoin as payment? A list of businesses (large and small) can be found at the website of 99Bitcoins, a provider of guides, reviews and tutorials about Bitcoin and cryptocurrency-related issues.
Meanwhile, Spendbitcoins.com contains lists of businesses by type – including 30 architecture firms worldwide and five U.S. churches– that accept Bitcoin.
Meanwhile, Spendbitcoins.com contains lists of businesses by type – including 30 architecture firms worldwide and five U.S. churches– that accept Bitcoin.
Benefits and drawbacks
Why use Bitcoin in the first place? According to mybitcoin.com, another web-based resource for information on bitcoin and other cryptocurrency, reasons include privacy – information on Bitcoin transactions is identifiable only through wallet addresses.
Bitcoin is also easy to use. Mybitcoin.com reports that “You can receive or send payments from your mobile phone or computer at the comfort of your seat back at home.” And transactions close quickly: “By just clicking the send button, a person in Japan can receive bitcoins from a person in Brazil within a few minutes,” the site notes, further explaining that “Banks usually have working hours and are closed at night, during holidays and during weekends.”
By just clicking the send button, a person in Japan can receive bitcoins from a person in Brazil within a few minutes....
Any drawbacks? Many people are still unaware of Bitcoin, note the folks at bitcoin.org. Meanwhile, because the total value of bitcoins in circulation and the number of businesses using Bitcoin are still very small, relatively small events, trades, or business activities can significantly affect the price of Bitcoin.
And, last but maybe not least, much Bitcoin software is still in its early stages, bitcoin.org notes, adding “In general, Bitcoin is still in the process of maturing.”
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For more information:
https://bitcoin.org -- Lots of information on all things Bitcoin.
https://www.mybitcoin.com/ -- another site with extensive information on Bitcoin and other cryptocurrency.
https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/ -- a listing of stores and other commercial entities that currently take Bitcoin.
http://spendbitcoins.com – a searchable database of all sorts of entities that accept Bitcoin.
https://files.stlouisfed.org/files/htdocs/publications/review/2018/01/10/a-short-introduction-to-the-world-of-cryptocurrencies.pdf -- an introduction to cryptocurrencies and blockchain technology.
