BitCoin: A Loop of Faith
If you find yourself in Allentown, Pennsylvania around lunchtime, feeling a little hungry but without any cash in your pocket, take heart: the Subway franchise on Hamilton Boulevard takes BitCoin. If you have the app on your phone, your sandwich will only cost you 0.006 BTC, or thereabouts.
BitCoin, the fabled virtual currency, developed in part by the Winklevoss twins, themselves famous for their early involvement with FaceBook, has upped its status in recent months, from being the currency most favoured by gun and drug runners on the Silk Road website, to receiving cautious endorsement from Fed Chairman Ben Bernanke.
To some BitCoin is already a cliché, to others is seems like an untenable idea, while to others, especially those involved in new technologies and possibilities, it seems like a herald of what’s to come. BitCoin is ushering in a new age of collaborative existence with which governments have a hard timekeeping pace. It is a major economic disruptor; a virtual currency whose value is based not on gold reserves or central government policy, but instead on a complex algorithm that bases its value on its own capacity to be a currency – a loop of faith, if you will, which is actually not so far removed from traditional currencies.
There are many dozens, if not hundreds of virtual currencies out there. BitCoin is only the most famous of the bunch – for now. But together they represent change, and a significant move toward decentralization and virtualization, just as cloud technologies are doing with big data.
Change is happening fast. In just a few short months, concurrent with the evolution BitCoin, the world has witnessed seen the emergence of innovations such as using drones as civilian delivery vehicles (many of which are already in service in Australia and China), and as well as the development of food replicators as well as a thousand other amazing things; and while the majority says, let’s be cautious and examine this before acting, there are others who take the Richard Branson approach instead and say, “Screw it, let’s do it.” One of these is the aforementioned Subway sandwich franchise in Allentown; and another is the online travel portal Cheapair.com, which already accepts payment in BitCoin. As Cheapair.com CEO Jeff Klee explains, one of the main reasons for doing so was customer demand.
“The idea to accept BitCoin originally came from a customer,” Klee says. “One of our travel advisors got the request and began asking around about it. I heard about it and got very intrigued by the idea so I started looking into it. I soon realized that Bitcoin would actually be pretty easy and very feasible to accept.”
Klee points out that as a currency BitCoin offers everything needed to manage a transaction. “From a purely practical standpoint, it almost doesn’t make sense for a company NOT to take BitCoin. There are third party processors out there who make it very easy to do (we use Coinbase), and they will allow merchants to accept as much or as little of the volatility risk (or reward) as they want. If there are a certain number of customers who prefer to pay in BitCoin, why would any company not want to accommodate them?”
On a higher level, Klee recognizes that virtual currencies are driving change, and moving economies out of long-held patterns of ownership by banks and credit card companies, along with the service charges which many merchant recognize as being disproportionate to true transaction costs. “It’s past time for an alternative payment system to challenge the entrenched players,” Klee says, “and I think BitCoin can provide just that.”
So whether BitCoin itself survives the hype of the moment, only time will tell. But it has awakened the world to the possibility of virtual currency co-existing with virtual data, virtual companies and even virtual jobs, all of which are based on an innate human desire to innovate and improve, which makes it all very real.
By Steve Prentice