Is it Time for You to Start Using Bitcoin?
Bitcoin, which refers to a digital peer-to-peer currency, is slowly making its way into our collective vocabulary. As with other new technology terms that came before it -- such as hash tag, the Cloud and Big Data -- soon many who hear it will instinctively be able to define it.
But right now many entrepreneurs -- even those who have a good understanding of how Bitcoin works -- wonder how relevant it is to their business. Just because there's a buzz about Bitcoin within the tech community, are Internet-based companies supposed to start accepting it now?
This was the question that Noah Karesh, CEO of Feastly, an app that matches home chefs to users in search of a home cooked meal, had for Andreas Antonopoulos, a Bitcoin entrepreneur. The two spoke before a crowd of about 130 people Tuesday at a Meetup in San Francisco called "The Connected Neighbor, Technology Enabled."
"When you look at the fluctuation that it's had recently, obviously there's a massive risk by accepting it because you don't know if all of a sudden that value that you got it at is going to drop or going to increase," Karesh said. "And I think that's probably one of the reasons why a lot of the big companies aren't sure whether or not they should be accepting it."
Karesh was referring to the volatility of the currency's value, which has been known to massively fluctuate literally overnight. Just this morning, North America awoke to find that Bitcoin's value had fallen nearly 40 percent.
Antonopoulos responded that those who own Bitcoin should view it as a long-term investment. On the other hand, as a merchant if you want to use Bitcoin in the short-term for transactions, there's a process you should take to protect yourself from yo-yoing rates.
"What we see most merchants do is they price the product in dollars, they then accept Bitcoin at the corresponding amount. And using a payment processor, they convert it immediately to dollars," Antonopoulos said. "So the time that they hold the Bitcoin is limited. It limits your exposure to exchange rate fluctuation."
Is It Worth It?
So why even bother with the extra steps if the transaction begins in USD and ends in USD? Bitcoin adopters will argue three main points: the currency is global, it's instant, and it's secure. There are a number of other reasons why a portion of the entrepreneurial community is so excited about Bitcoin, but at this nascent stage of its use, they are likely years away from being realized.
"We're still going through growing pains so at the moment. It's a bit like riding a Zodiac next to the Titanic of the US dollar, and we’re bouncing up and down in the waves," Antonopoulos said.
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