For those who don’t know, Bitcoin is a peer-to-peer payment system and a digital currency. Bitcoin with the capitalized “B” is the payment system and bitcoin with the lowercase “b” refers to the currency. In theory, Bitcoin digitizes the payment system and offers protections from identify theft, debit/credit card fraud, and other forms of modern day financial intrusions. Despite this, many government agencies aren’t fond of the system as the anonymity creates an environment for illicit activities.
I could go on and on about Bitcoin itself but I don’t think that’s what the hype should be all about. In my opinion, Bitcoin isn’t the final answer but it prompts us to think of a world where cash, checks and cards are out, and a fully digital transfer of money happens – and happens immediately.
From a merchant’s perspective, money has immediately transferred from the buyer’s account into the seller’s account. No temporary credits and imaginary holds in the background but a true exchange of money from one party to the other. Without the temporary provision of debits and credits there isn’t a chance that the money wasn’t actually in the buyer’s account, which means no overdraft charges and no losses to merchants or to banks when customers write bad checks or overspend with their card.
I certainly don’t want to knock debit cards as they have revolutionized the way we pay for goods and services, and while they’re a great method of payment, it still is not immediate. Popmoney® and other person-to-person payment forms have revolutionized the way we can exchange money between individuals, but the payment is still not immediate.
The theory of Bitcoin revolutionizes the movement of money in a cashless environment where the money is digitally and securely transferred from the sender’s account into the receiver’s account immediately without holds, credits, or overnight processing.
While Bitcoin has its flaws and some of these have recently questioned the stability of the infrastructure, Bitcoin has challenged us to think about the exchange of money and I’m positive it has prompted the beginning of the end for cash, checks, and cards.
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