Beginner's guide to Bitcoin and what it means for ecommerce

Bitcoin in eCommerce

No one doubts how money has evolved. Alongside all forms of technology progress, money has come for the ride, sometimes leading the way. Today, anyone can transfer money from anywhere in the world. From your phone, you’re able to make large transactions without ever having to go into a bank and sign numerous forms. But progress isn’t about the destination, it’s about the journey. While money has become digital currency too, it still adheres to traditional notions of currency and exchanges. A more radical form of monetary progress might mean doing away with these sorts of concepts. That’s where Bitcoin comes in. Considering its potential and current impact, it’s important for anyone – but especially business people – to consider precisely what Bitcoin is and what it will mean for ecommerce.

What is Bitcoin?

Unlike cards or bank transfers, Bitcoin is an entirely new currency. As noted, these modern forms of transacting still rely on your country’s currency (even if it gets converted during transfers or payments). Invented in 2009, Bitcoin’s main benefit is that there are no middle-men. As CNN Money points out:

“There are no transaction fees and no need to give your real name. More merchants are beginning to accept them: You can buy web hosting services, pizza or even manicures.”

Naturally, this has to be agreed upon by the vendor. The concern for authorities, of course, is that Bitcoin provides complete anonymity. Though, as defenders of Bitcoin have highlighted, cash money (paper notes and coins) also isn’t dependent on the identity of the owner.

Every Bitcoin transaction is recorded in a public log, but the names of those involved are kept anonymous. The only identifying information is their wallet IDs. Naturally, those engaged in illicit activities find this beneficial, but it’s not only criminals that use it. After all, criminals use traditional money, too. This naturally can revolutionize ecommerce and upend large aspects of what people consider to be a monetary transaction. There are numerous legal aspects to all forms of ecommerce, but Bitcoin is, by definition, not tied to any one country’s laws. It is not a currency held to national standards.

How is it controlled?

Of course, laws are aimed at protecting, especially when it comes to digital currency. Since there are no actual global laws governing Bitcoin, most users must rely on the system itself to correct problems. For example, the public database is designed to be open to everyone, so no one can cheat. Using the example of apples and digital apples, Coindesk explains:

“All the transactions that have ever happened, from all time, in digital apples, will be recorded in [the public database]. You can’t cheat it. I can’t send you digital apples I don’t have because then it wouldn’t sync up with everybody else in the system. It’d be a tough system to beat. Especially if it got really big. Plus, it’s not controlled by one person, so I know there’s no one that can just decide to give himself more digital apples. The rules of the system were already defined at the beginning.”

In this way, the system helps to control itself. It means you don’t need any external body to make sure these deals happen properly.

Why should businesses care?

The evolution of money should be central to all businesses. After all, no one wants to be in a position of being unable to accept funds from a customer or client. While countries have not all completely embraced or even legalized Bitcoin transactions, it’s still important to think about what it would mean for businesses to accept such currency.

Considering all modern business is on a global stage, it’s important to constantly keep abreast of ecommerce trends like Bitcoin. That people are already using it and making profits from it should be of interest to every business person.

Combining this with other technologies, like mobile apps, could lead the way for new forms of interacting with clients and conducting business. As we’ve pointed out, technology is converging in a number of ways, and by recognizing the direction ecommerce is going, businesses can prepare themselves for a more streamlined future.