Why Did We Start Using Bitcoin?
The short answer? It’s useful and we believe in its future.
Additionally, I feel we can help other businesses realize its potential and help them use and accept it. Read on and I’ll expound:
I’ve gotten a mix of reactions from the bitcoin slider and page on the website. The majority of the public has at least heard or read about it in the media and the questions I receive usually reflect this level of familiarity. So the first questions I get are usually “What is it?” and “How does it work?”. Unfortunately, we’ve left the details sparse up until recently.
What is it?
A decentralized system to transfer and store payments. It is also a new kind of money. To get a bit more detailed, it’s a bit like cash in digital form that is neither controlled nor produced by a central authority. Transactions are securely recorded in a cryptographically secure ledger called the blockchain. The blockchain is publically viewable and offers some really distinct advantages over cash which I’ll discuss later on.
How does it work?
This is always a difficult question because the system through which bitcoin functions is difficult to explain to an audience without knowledge in p2p networks and public key cryptography. It’s also frustrating because nobody ever questions the way through which US dollars are created. Suffice it to say, the key points are it’s impossible to counterfeit (since 2009 there has not been a successful attack against the network), very costly to “mine” new bitcoin, and very easy to carry. I’m including a short video below that explains the basic functionality:
What’s with the bad news?
If I don’t get the above queries, I get asked about the negative press regarding MtGox or stories about people that got hacked. One of the habits it’s really hard for bitcoin users to break is the desire to store bitcoin with a third party. This is understandable, we spend our entire lives utilizing banks to transfer and store unweildly cash. A majority of the early bitcoin businesses did not have the resources or the experience to secure their systems or physical locations. Storing bitcoin with a company in the first couple years was like trusting a briefcase of cash to a random highschooler. The other common story is losses from phishing attacks or trojans that steal bitcoin off online computers. We suggest offline storage, called “cold storage” that is not vulnerable to being hacked.
Personally, I’ve been involved in the bitcoin community since early 2011. I once mined the currency with GPUs when it was profitable to do so, I’ve traded for physical and virtual goods, and I’ve lost some of my coin through a third party trading exchange. I’ve bought and sold many things with bitcoin, met some interesting people, and got to watch an economy emerge from nothing. I waited so long to get the company involved because I wanted to give our government time to decide how to tax bitcoin so we wouldn’t run into a legal hassle. The IRS finally gave guidance early this year on how to report bitcoin activity. Full publication here. With this in place, it’s much easier for businesses to handle bitcoin without fear of being in a legal grey area.
Where do we go from here?
With bitcoin becoming more mainstream and the recent IRS publication giving tax advice, now is the time for businesses to seriously consider integrating bitcoin payments as a supplement to their current revenue collection streams. To find out more about accepting bitcoin at your business, check out our comprehensive page on bitcoin, leave a comment below, or drop us a line on our contact page.