BitCoin: The Currency Of The Future?

This week, BitCoin (BTC), the virtual cryptocurrency that is not supported by any national bank or government, reached an all-time trading record, selling at $33.22 for a single BTC.

Kim Dotcom’s cloud hosting website Mega has recently started accepting BitCoins as a form of payment, following the example set by WordPress, Reddit and countless other online businesses. But how do you begin working with BitCoins?

CBT Nuggets, an American IT training company, has published a series of free online training videos, which cover a variety of BitCoin-related topics from setting up and using a BitCoin wallet to updating company websites for accepting payments in virtual currency. TechWeekEurope asked Dan Charbonneau, CEO of CBT Nuggets why he thinks BitCoin is such a perfect fit for e-commerce.

Satoshi’s gift

BitCoin is a 100 percent digital form of currency, based on an open-source, peer-to-peer Internet protocol. It was first introduced in 2009 by an anonymous developer known only by the alias ‘Satoshi Nakamoto’. Today, the monetary base of BitCoin is valued at over $360 million.

“It is not a question of whether businesses will accept BitCoin, it is ‘when’ they do it,” Charbonneau tells us. “The main advantages of BitCoin are: there’s no fraud, no charge-backs, no identity theft. It’s just a low overhead, simple way to accept payments.

“The disadvantage for the consumer is they have to completely trust the business. That actually ends up being a positive thing for e-commerce in general, because now companies have to go to further lengths to prove how trustworthy they are.

“From a business perspective, it’s a no-brainer: you turn on BitPay, and start accepting BitCoin. It’s just like integrating PayPal, and you have to ask yourself ‘why not?’ Once you turn on BitPay, you are accepting cash, and you are actually making more money than with credit cards, because of high interest rates on merchant accounts.”

This and other topics are explained in a series of 13 videos produced by CBT Nuggets and presented by consultant Keith Barker. The course is offered on a pay-what-you-want basis – with donations accepted in BitCoin, obviously.

The new Gold Rush

BTC is not tied to any real money, but traded on various electronic exchanges to establish its price. Charbonneau thinks that in these turbulent times, the lack of centralised structure is an advantage, rather than a drawback.

“The US economy is pretty heavily laden with debt, and we’re up against the inevitable crash of our currency. Common sense says that you can’t run up all your credit cards and then get another credit card to pay off your debt. And yet this is exactly what is happening. When the disaster finally strikes, the logical thing is to turn to a currency that is backed by something immune to corruption.”

Charbonneau says that the last time the US took responsibility for its currency was back in the sixties, when it was guaranteed by gold. BitCoin takes us back to the days of the gold standard, because you cannot simply create more BTC – just like gold, it has to be ‘mined’.

The only way to generate new BitCoins is through mathematically intensive cryptography operations, requiring a lot of time and computational resources. In line with Moore’s law, BitCoins will be released at a rate of one block (currently 25 BTC) every ten minutes until about 2030, with the final BitCoin expected to be generated around year 2140.

Charbonneau says that ‘mining’ is gradually transforming from something “nerds did in the basement” to a profitable business. CBT Nuggets itself owns four mining ‘rigs’ equipped with 2-3 video cards each, working round-the-clock to mint fresh BTC. The process is explained in one of the training videos produced by the company.

There are less obvious advantages to taking payments in virtual currency. PayPal notoriously doesn’t accept payments from some developing countries, a fact that pushed WordPress to experiment with BitCoins in the first place. The same goes for Visa and MasterCard. With BitCoin, “there can be true global competition. We can have one world economy, without taxes, import, export, and without every government trying to control it,” Charbonneau tells us.

And another important factor: unlike physical money used around the world, BitCoin actually grows in value as time goes by. True, the exchange rate had collapsed several times in the past, following high-profile hacks and electronic heists. But BTC always returned to growth, stronger than ever. The recent increase in trading volume and circulation should lend more stability to the virtual currency.

“The whole idea of a currency that increases in value is so foreign to us, so it is exciting to be a part of this movement. We accept dollars and then we just can’t wait to get rid of them, because we know that tomorrow those dollars are going to be worth less. So we have to get them into some vehicle that is not going to be worth less, to protect ourselves,” explains Charbonneau.

In contrast, BitCoins can be stored for long periods of time, and have more potential to multiply your savings than any bank account or stock portfolio. Charbonneau notes that the early adapters stand to benefit most from the predicted rise in the value of BTC.

“If you look back to when the Gold Rush was happening, you weren’t as protected then, financially, but there were still people rushing to get involved, because they wanted to find the big rocks. Give BitCoin 5-10 years and everything will be safe and controlled. But at the moment, the risk to reward ratio is impressive.”

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