Bitcoin, Bitcoin, Bitcoin… We’re hearing it everywhere, aren’t we? It’s being covered everywhere in the media, including a recent NPR story about a Bitcoin wallet theft—the humor in the story apparently that all the coins, wallet, and theft were virtual.While it is true that Bitcoin operates in an entirely virtual, e-commerce realm, its currency is very real for the businesses and individuals who use it.
Here’s a quick shorthand sketch of what Bitcoin is. It’s a peer-to-peer payment system and digital currency introduced as open source software, started in 2009, which allows businesses and individuals to transact business online without the use of a middle-man, like a bank or Paypal. This also means that no intermediary is tracking your online e-commerce activity. This is hugely appealing to many people, especially in light of the recent N.S.A. leak case and Target data-breach.
Also, Bitcoin’s removal of the middle-man takes away the banks’ ability to charge usage fees for transacting your e-business, which after the financial crisis of 2008 may be a way for Bitcoin’s users to make a socio-political statement about global financial practices as well. NPR’s Steve Henn had this to say. “Well, it's been pretty interesting. You know, bitcoin was developed after the financial crisis. And in many ways it was sort of a critique of the modern financial system.”
There is speculation that a combination of speculative activity which drove Bitcoin’s stock into the stratosphere and the recent large thefts which have rocked its community may undermine its use as a currency. However, U.S. regulators are moving in to shepherd the new currency and its market. The Internal Revenue Service has issued guidelines that Bitcoins are to be treated as physical assets. While it is not backed with the full faith of a government, it seems that governments, banks and businesses worldwide are taking Bitcoin seriously.