SWEEPS PKG | Digital Currency 101: Everything You Need To Know About Bitcoin
What is bitcoin? How does it work? Is it safe? Should retailers accept it? Why should I care? Get the answer to all of these questions in this bitcoin 101 tutorial.
WASHINGTON - When it comes to understanding bitcoin, the world's first decentralized digital currency, experts say to avoid the details.
"It’s the same thing with driving a car,” said Perianne Boring, founder and president of a D.C.-based bitcoin nonprofit, the Chamber of Digital Commerce. “How many people don't understand how a car works or why it works? Understanding the underlying process isn't necessary. What is necessary is that it's accessible and easy to use."
Boring believes in bitcoin. Last year, she quit her job as a financial journalist and founded the “Digital Chamber,” as it is otherwise called, a nonprofit organization dedicated to advocating on behalf of the digital currency industry on Capitol Hill.
In other words, Boring’s job, among many other things, is to make bitcoin easy enough for anyone to understand.
In its most simple form, bitcoin is a type of currency, just like the dollar or the euro, that can be used to buy merchandise, exchanged for other currencies and invested.
There is one major difference between bitcoin and other well-known currencies that many notice right from the beginning. If you want to pay for a cup of coffee, for example, with the U.S. dollar, you can hand over cash, write a check or swipe your credit card.
With bitcoin however, there is no cash equivalent. Just like your email address, bitcoin is all digital and lives online.
While bitcoin (and other digital currencies) might seem overwhelming, Boring assures that digital currencies are actually pretty commonplace.
"Digital currencies have been around since at least the 1980's, so digital currencies are nothing new."
You're probably familiar with some of today's popular digital currencies, like Starbucks Stars and airline miles. The difference between bitcoin and Delta Airlines, for example, is that Delta owns SkyMiles, and determines their value.
Bitcoin is a decentralized currency, meaning it is not owned by any government, company or person.
This trait is one of many reasons why advocates believe bitcoin is the safest and most secure currency on the market.
"Bitcoin is a one-way payment system, much like cash,” explained Josh Riddle, CEO of Bitsie, a bitcoin-based company out of Baltimore. “Every time you swipe your card, you're giving away your name, your card number, which can be used for identity theft. With bitcoin, there's no identity attached to it. So I don't have to know who you are in order to give you money, or receive money."
Plus, with transaction fees lower than credit cards (less than one percent on average, according to Boring), and minimal risk fraud (charge backs are basically impossible, according to Riddle), experts say bitcoin is great for small businesses.
"The smartest, the brightest people are jumping into this industry, and it's growing," Boring said. "It's coming, and there's really no way to hold back this wave of innovation."
"There have been many studies that suggest within the next 10 years, you're going to see less and less cash, less and less credit cards and more of a digital currency,” Riddle said, “a currency which was made for the internet.”
'Magic internet money' that, once understood, has many shifting their views from "why accept bitcoin?" to "why not."
To find out more on how your business can start accepting bitcoin, click here.
This feature was produced for WHAG-TV/NBC 25/Your4State as a special February "sweeps" report.