If you feel that Bitcoin isn’t important, or you haven’t been keeping up with this digital currency, you might want to reconsider.No, Bitcoin won’t be replacing the dollar, pound, or Euro anytime soon, but you’re still going to be hearing quite a bit about it now and in the future.
So, what does your small business need to know about Bitcoin? Surprisingly, Bitcoin actually has very little to do with money. The power behind this digital currency is a technology called blockchain. Upon further investigation, this technology could challenge your assumptions about what makes commerce trustworthy and secure.
Early on, nobel-winning economist Paul Krugman dismissed Bitcoin as a fever dream for anti-government partisans. Even so, he did admit that “It does indeed solve an interesting information problem – although it’s not at all clear whether solving that problem has any economic value.”
However, leading names in finance argue that blockchain is the economic value, and that it very well could transform the world in the next decade. Diving fully into the details of blockchain involves massive amounts of computing power and cryptography. The Economist’s simplified explanation will help those curious to understand the basics.
The easiest thing to compare Blockchain to is a sequential spreadsheet of transactions, which constantly update on a global network of computers; this spreadsheet services as a distributed ledger. This ledger is encrypted as it’s being written; thus, the transactions it contains can be safely verified by legions of other computers across the wide network.
In short, Blockchain removes the need for a trusted third party to guarantee a transaction. Today, third-party institutions like banks provide the high levels of trust required to verify financial transactions. The biggest advantage of Blockchain is that it combines distributed architecture with powerful encryption. The blockchain itself coordinates agreement among all the parties in a transaction, in a way that’s highly resistant to interference.
Although sophisticated, the process is also pretty simple. Entries are created and protected with cryptocurrency in a digital ledger; this ledger becomes increasingly secure the more people participate in it. With Bitcoin, individuals are paid for their work in verifying blockchain transactions.
For businesses, it can be hard knowing how to jump in with Bitcoin. One of the safest solutions is a bitcoin merchant account. Despite the controversies, blockchain might just be the breakthrough that could reshape commerce across the entire digital economy.
Author Bio:Electronic payments expert Blair Thomas is the co-founder of high-risk payment processing company eMerchantBroker. He’s just as passionate about his business as he is with traveling and spending time with his dog Cooper.