Bitcoin has generated a lot of buzz since its price increased a hundredfold over the course of 2013, according to Forbes. But what exactly is a Bitcoin? Do you know? Even if you do, would you be able to explain the concept? Could you explain it to the population that perhaps struggles most to understand new trends and inventions, namely your grandparents?
Grandparents most likely understand the process of buying items online. What may be lost on them is why someone would want to use Bitcoins as opposed to Visa or Mastercard. Well, there are two major reasons.
To put it simply, when you use a credit card at a merchant, that merchant must pay a percentage of the sale to the credit card processing company. This takes money away from the merchant and, if the merchant passes this extra expense onto the customer, it translates in higher costs for you. That’s the first reason to use Bitcoin—by avoiding transaction fees, it’s less expensive and more efficient.
The second main reason involves international commerce. In international transactions, merchants often run into problems when processing particular currencies or payment methods. Bitcoin offers these merchants an internationally accepted currency free of the conversion fees that banks and financial institutions charge. Bitcoin is not centrally regulated or controlled by any government. This lack of regulation removes many of the barriers that would prevent a merchant anywhere in the world from accepting them.
A lot of the negative press surrounding Bitcoin comes from its willingness to keep buyers anonymous; according to Bloomberg, this makes it a popular currency for conducting illegal business. The value of a Bitcoin also fluctuates quite rapidly. If you buy $ 100 dollars worth of Bitcoins today, they may only be worth $ 50 in a few days, according to the Washington Post. Of course, the value of your Bitcoins might also double.
So what is all the excitement about then? Well, just like the telephone in its early years, Bitcoin’s struggles and problems do not mean that it is a hopeless technology. The mistakes being made by Mt. Gox (as reported by Tech Crunch) show us what not to do when it comes to handling Bitcoins. If anything, Bitcoin is an interesting experiment to watch and talk about…for all age groups.
Shareable Facts and Stats
- Bitcoin is a currency that is held and spent electronically around the world. <Tweet This>
- Bitcoins can only be used online; even physical Bitcoins have an online address and password that you need to make purchases with them. <Tweet This>
- More than 15,000 online retailers accept Bitcoins as a payment method. <Tweet This>
- Bitcoins are stored online in your Bitcoin wallet; but when spending, your personal data remains private. <Tweet This>