Bitcoins are bought on digital exchanges at a rate which varies like any other currency, but a rate which has been volatile since its introduction. As with Paypal, monies (in this case Bitcoins) are received and paid out of a ‘wallet’, but no banks or credit card companies are involved.
Now the big companies are moving in to support this new payment kid on the block. Dell USA, the multinational computer technology specialist, announced in July that it is accepting Bitcoins through a partnership with Coinbase.
With Dell, it works like this. At the option of the buyer of for example a Dell personal computer, the normal local currency price of the PC is translated into Bitcoins at the current rate via Dell’s bitcoin payment provider, Coinbase. The buyer then just needs a bitcoin wallet with sufficient bitcoins. Once the transaction is agreed online, the payment is made, like cash.
There are a number of advantages in using Bitcoins. The buyer affectively settles in cash. Payments can be accepted from anywhere. There are no chargebacks and no currency volatility risk. Personal information is not shared. The Bitcoin is accessible anywhere in the world, provided an internet connection is available, there are no transaction/foreign exchange fees , no security checks or regulations, just wallet security and this can reduce the price (Dell initially offered a discount). The transaction is non-reversible and so businesses can avoid returns.
However, as with all new things, caution is necessary. The Bitcoin has not yet been widely adopted, although the list of what you can buy with Bitcoins is growing. (Try a meal at the pink cow in downtown Tokyo…). The dangers are that the value is easily influenced, making it a volatile currency option. There is no (easily discoverable) trail of transactions for retailer (although this also creates a high level of security) and the buyers wallet can easily be picked from your computer’s pocket if someone gets access to the private key.
So, look before you leap – herewith some sites giving information:
- What is a Bitcoin?
- What can you buy with Bitcoins?
- Latest Bitcoin rate – XBT
- Bitcoins - getting started
- How to buy Bitcoins in the UK
- Dell USA Bitcoin introduction
- Dell USA Bitcoin terms and conditions
- Bitpay – a merchant solution for Bitcoin payments
- Cryto currency guide by Crowd for Angels
- Economics of Digital Currencies - Bank of England