From social media to cloud reseller hosting and e-commerce, it’s clear that the internet has changed our lives in many different ways – including the way we budget, save and manage our money. Internet banking is now commonplace, but will Bitcoin ever become the norm for web transaction and will it sit neatly alongside Visa and Paypal as a viable and trusted payment option?
What is Bitcoin?
Firstly, it’s essential to understand what Bitcoin actually is – the world’s first decentralised digital currency launched in 2009 by a mysterious person (or group of people) known only by the pseudonym Satoshi Nakamoto. Unlike traditional currencies such as the pound, dollar or Euro, which are issued and monitored by central banks, Bitcoin has no central monetary authority and is instead watched over by a technology advanced peer-to-peer computer network made up of its users’ machines which communicate to approve and verify all transaction.
Bitcoins or fractions of Bitcoins known as Satoshis can be bought and sold for traditional currency and transferred across the net using appropriate software. It’s a system with little or no transaction fees and as users verify transactions with their own personal keys and are not required to give any contact details, there is almost total anonymity.
The benefits of Bitcoin
With online activity dominating a significant proportion of people’s lives, it’s easy to see how Bitcoin could theoretically grow in popularity – after all, it’s a web-based activity that appeals to techy minds and a modern audience looking to reduce transfer costs and live freely without being monitored at every turn by a central monitory organisation. With the ability to settle transactions both locally and internationally without worrying about bank charges and exchange rates, Bitcoin is also a potentially attractive currency for global businesses or those looking to break into the international market.
What’s more, Bitcoins are mathematically generated in a process called Bitcoin ‘mining’, meaning that there is no way for a central bank to create more Bitcoins and devalue those already in circulation. In fact, the total number of Bitcoins that can ever be created is 21m and each user is assigned a fixed number of new Bitcoins upon approval by the network.
The negatives of Bitcoin
Bitcoins are notoriously volatile and have been renowned for losing up to 60 per cent of their value in just a few hours showing how they’re, perhaps, not an affective store of wealth – which, in turn could prevent them from taking grip in the future and becoming “the norm.”
It’s also important to note that many people these days, still don’t use or trust internet banking – a service made available by the world’s largest and most reliable banking groups. In fact, a survey by Kaspersky Lab revealed that over half of Brits believe traditional over-the-counter banking is safer than going online perhaps indicating that if the most popular web transaction methods don’t appeal to everyone – lesser known Bitcoin activities may never interest the masses.
The future of the internet and web transactions is hard to predict. Anything can happen over the next few years and decades and while Bitcoin is in its infancy at the moment, it may adapt to meet the needs of the general public.