Bitcoin is a word you’ve undoubtedly heard in the news lately, but it’s still a confusing term that is often associated with nefarious transactions. The truth is that Bitcoin and other virtual digital currencies (referred to as cryptocurrencies) are becoming more mainstream, and more businesses are accepting Bitcoin for purchases every day. It’s important that you understand what Bitcoin and cryptocurrencies are and how they could affect business in the future.
What is Cryptocurrency?
Cryptocurrency is a type of virtual digital currency that is exchanged between two parties without a middleman. Bitcoin is one form of cryptocurrency, and it’s been around for 10 years. Since this type of currency isn’t controlled by a government or bank, the price is set by the open market and is based on what people are willing to exchange the digital currency for.
Why Cryptocurrencies like Bitcoin Matter to Business
You can buy Bitcoins using money through a Bitcoin exchange, or you can mine Bitcoins, which means you provide the computing power to process and store Bitcoin transactions on the Bitcoin ledger, which is known as the blockchain.
To spend your Bitcoins, you set up a Bitcoin wallet on your computer or phone to keep your coins secure until you’re ready to spend them. Thousands of companies accept Bitcoin for payments, including household names like Amazon, Etsy, and WordPress.
It’s very possible that cryptocurrencies like Bitcoin could significantly change how businesses operate and how consumers purchase products and services in the future. For example, Bitcoin doesn’t require a bank account, can be used for very small transactions that might otherwise require a minimum payment fee, and could speed up transactions. Already, many banks and companies are looking for ways to invest in blockchain technology.
However, there are threats to the future of cryptocurrency. For example, increased regulations could change everything, and security risks, such as recent hacking incidents, could scare people away from Bitcoin and other cryptocurrencies. Furthermore, there is concern that cryptocurrency is already approaching its peak and could suffer a fate similar to the dotcom bubble of the 1990s.
Only time will tell if Bitcoin and other cryptocurrencies will continue to grow. In the meantime, you should understand them and how they could affect your business. The infographic below from Cartwright King provides a great overview of Bitcoin basics.
Susan Gunelius
Susan Gunelius is the Founder and Editor-in-Chief of Women on Business. She is a 30-year veteran of the marketing field and has authored a dozen books about marketing, branding, and social media, including the highly popular Ultimate Guide to Email Marketing, 30-Minute Social Media Marketing, Content Marketing for Dummies, Blogging All-in-One for Dummies and Kick-ass Copywriting in 10 Easy Steps. Susan’s marketing-related content can be found on Entrepreneur.com, Forbes.com, MSNBC.com, BusinessWeek.com, and more. Susan is President & CEO of KeySplash Creative, Inc., a marketing communications company. She has worked in corporate marketing roles and through client relationships with AT&T, HSBC, Citibank, Intuit, The New York Times, Cox Communications, and many more large and small companies around the world. Susan also speaks about marketing, branding and social media at events around the world and is frequently interviewed by television, online, radio, and print media organizations about these topics. She holds an MBA in Management and Strategy and a Bachelor of Science degree in Marketing and is a Certified Professional Career Coach (CPCC).
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