By Michelle Horstman ——Bio and Archives--January 22, 2014
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Bitcoin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by pseudonymous developer Satoshi Nakamoto. It is a cryptocurrency, so-called because it uses cryptography to control the creation and transfer of money. Users send payments by broadcasting digitally signed messages to the network. Participants known as miners verify and timestamp transactions into a shared public record called the block chain, for which they are rewarded with transaction fees and newly minted bitcoins. Conventionally "Bitcoin" capitalized refers to the technology and network whereas "bitcoins" lowercase refers to the currency itself. Bitcoins can be obtained by mining or in exchange for products, services, or other currencies.Bitcoins are being used in different ways at this point. Some bitcoin holders are using them like any other currency, seeking out establishments that will accept them as payment, while others are "mining" or generating bitcoins, and still others are holding bitcoins like an investment, hoping for a huge windfall. Looking at the past few months, bitcoins have fluctuated quite a bit in value and are volatile, but perhaps no riskier than investing in other up-and-coming stocks. Bitcoin is a gamble like any other investment.
No Fees. Your first $1,000,000 in payment processing is free on Coinbase. After that, pay just 1% to cash out bitcoin. No Chargebacks. There is no need to worry about chargebacks when using Bitcoin--they don't exist. No Exchange Rate Risk. You receive the exact amount of local currency you price your products at, guaranteed.Daniel from the Coinbase.com support team was kind enough to respond to a few of our questions about Bitcoin:
People say bitcoins are backed by nothing, but how is that any different than the Fed Reserve/ US dollar at this point in time? Bitcoins are largely backed by peoples' belief that they hold value (in addition to it's cryptographic properties). The US dollar has value as everyone in the USA, by law, must accept it for payment. People say Bitcoin will collapse when the supply is exhausted and that it is a short-lived bubble. Comments? The Bitcoin supply will never be exhausted. This is because they can be divided into infinitely small amounts. The BC market is volatile but your service eliminates that concern for merchants. Isn't this a big risk for you? Coinbase automatically sells BTC for USD for many of our merchants at the time of sale. This removes any volatility risk for our merchants. Anyone who holds Bitcoin does so at their own risk, as the market is currently very volatile. Some of our merchants do choose to hold a certain percent of their income in Bitcoin as an investment. Would bitcoins have the potential to harm the independent economies of nations? That depends on how it is treated as a currency. Bitcoin has many benefits that could be integrated with the current banking system.Considering what we have learned about Bitcoin and the processing services available from companies like Coinbase.com, at ChoicePromotionalProducts.com, we've decided to begin accepting Bitcoin as a payment method. What about your business? Will you choose to go the Overstock.com route and give it a try, or will you subscribe to the Paul Krugman opinion, that Bitcoin is "evil"? Either way, it's a fascinating concept to learn more about and we think it's going to be around for quite awhile.
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Michelle Horstman is a small business owner, artist and mother of three in Texas. Michelle also writes for NewsRealBlog and her personal blog can be found at Benfranklinslepthere.blogspot.com </em>