By Bob Tuskin
Bitcoins are becoming more and more widely accepted. About a month ago a Floridian bought a Tesla car for a hundred Bitcoins. And the trend does not stop there. A bar in Spokane, Washington has decided to start taking Bitcoin for booze. The bar, Volstead Act, made its first Bitcoin transaction the other day for the sale of three drinks.
Using Bitcoin is extremely attractive to small businesses, for a number of reasons. One, the fees that vendors typically pay for accepting credit and debit cards are omitted. These fees, which are typically around 3%, add up, and are especially hard on vendors who make low ticket transactions.
Secondly, with all the talk of major retailers leaving your credit and debit card information vulnerable to thieves, Bitcoin offers far more built in security. Bitcoin payments are more secure than other electronic payments and can be processed with no possibility of others being able to trace the name or other information of the buyer.
Also, using Bitcoin is a way to get off the vulnerable dollar. The instability of the dollar is definitely a factor to any one who is even paying the slightest amount of attention.
The Spokeman-Review interviewed Sandeep Krishnamurthy, dean of the University of Washington’s Bothell campus School of Business about Bitcoin and its decentralized and not regulated or controlled nature.
He pointed to the Bitcoin exchange rate to the U.S. dollar to demonstrate that volatility.
In January 2013 each Bitcoin, according to a Web-based exchange, was roughly equal to $50. In the fall, due to factors Krishnamurthy said included wild speculation, the exchange rate jumped as high as $1,200.
Many business analysts at that point declared Bitcoin was a bubble waiting to burst.
On Friday, one popular Bitcoin exchange listed the exchange rate as $862 per Bitcoin.
Krishnamurthy acknowledged Bitcoin can make sense as a universal currency used on the Internet. The system of payments ensures that merchants quickly learn if a payment is approved. And its computer encryption is highly secure, preventing the types of breaches that afflict companies like Target, which recently reported a hack that exposed data for up to 70 million of its customers.
“It’s a kind of a cool idea, for young people, especially for those who are anti-establishment,” Krishnamurthy added. Whether Bitcoin develops into a widely used currency, he said it’s clearly appealing to early adopters “who want to try something new and be ahead of the curve.”
He warned, however, that if Bitcoin grows more popular, governments could start imposing regulations that change what its supporters like most about it – the simplicity of being able to make payments without having to deal with bank accounts or credit card companies.
Regardless of any reservations certain economists have, many who have been significant proponents since its inception do not see the same negative possibilities.
“Bitcoin has the potential to be anything the people want it to be. The only way governments could completely stop it would be to outlaw computers, cell phones, and the internet itself… and how likely is that?”