What is a Bitcoin?

Joseph Stubblebine
Posted by in Management & Business


 

Companies just like yours are adopting new ways of accepting currency every day. Online currency trading methods, such as PayPal, have become commonplace for businesses that primarily exchange goods or services over the Internet. Bitcoin, a startup from 2009, has changed the way people pay for goods in an exceptionally short amount of time. Only a small handful of businesses accept the currency, but it may continue to grow in adoption over time.

 

Bitcoin was originally created to be a cryptocurrency, a currency not tied to any state or government. It is mined by a Bitcoin calculator, which solves complex mathematical equations in the hope of stumbling upon a currently unused string of characters and numbers that can provide users with Bitcoins for their virtual wallets. Around 10,000 Bitcoins were required to buy a pizza just a couple of years ago, but they are now valued between $100 and $250.

 

The value of a Bitcoin changes constantly due to fluctuations in the market. Coins are traded openly on private Bitcoin exchanges. The number of potential Bitcoins in the system is limited; only 21 million can ever be discovered by those using a Bitcoin calculator. This gives the cryptocurrency a major risk of deflation, and an untraded currency has no value whatsoever. Companies that engage in the use of Bitcoin trading for goods or services are agreeing to use a currency alternative that may change dramatically in value from one hour to the next. This involves a large amount of speculation and is different in many ways from traditional currency trading.

 

When your company is ready to consider Bitcoins as a potential method of payment, you should evaluate its benefits versus the risks. The cryptocurrency is, according to Alex Planes, commonly used for money laundering and potentially illicit purchases made online. Customers wishing to pay with Bitcoins may or may not have engaged in such practices, but a stigma may grow around the use of the alternative payment method due to such uses by others. Choosing to use Bitcoins may provide you with a lucrative customer base, however, provided that the potential of the cryptocurrency to continue growing in value holds true over time.

 

PayPal and other online payment methods have dramatically changed the way that retailers and service providers think about virtual payment options, and Bitcoin may someday find a place alongside those options. Getting your business involved with the cryptocurrency at an early stage may have great benefits should Bitcoins continue to increase in value, but you should consider the potential pitfalls and negative associations that may come along with adoption of the alternative payment method. There is a very large amount of speculation involved in current and future Bitcoin trading, but great risk and reward often go hand in hand in the business world.

 

(Photo courtesy of freedigitalphotos.net)

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