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The Impact Of The Bitcoin On Small Business

Michael Hollis

Small businesses are the backbone of the economy and are very much affected by the large financial changes that happen. Occasionally there are large tends and movements that are obscure but have the potential to be highly influential in the normal day-to-day business of smaller companies. Bitcoins are just such a change. It is a relatively new concept that may or may not last but has the possibility to change the face of how we exchange money.

What is a Bitcoin?

Some speculate that it was started as a joke, muse or just a pseudonymous hacker with a vendetta but the reality is that there are real people that place real value on it and trade for real goods and real services.  It is a decentralized currency that is not regulated by banks or governments but a series of complicated algorithms.  Imagine a new country “Bit-onia” was made and they had a currency of Bitcoins and we could buy and sell this money like we would US dollars, British pounds, or even gold but with a huge difference of no fees attached.  There are no greedy bankers or scheming middlemen so your monetary transactions go straight to the intended recipient.  It does not “Pass Go” and it will not “Collect 200” for someone else but is transferred to your destination using all the security of the shared global computing of the cloud-like network.

It is safe and secure?

The safety and security is highly debated by financial minds all around the world.  Some say it has a more stable and secure foundation than even the US dollar being based off mathematical calculations and not market trends or governmental regulations.  As for how the security works, there is a network of normal people out there who outsource their idle computers to “mine” for Bitcoins making it one of the most secure and anonymous transactions you may have.  Even the most common person could join in this network and help be part of this global super computer helping to keep the network safe and protected and getting paid in Bitcoins to do so.

What is the effect on global currency?

Because this is a new phenomenon that has no precedence or history, lawmakers are scrambling to understand what it means and find a way to adapt to it.  As of the day of writing this, there is no legislation, tax restriction or regulation of any kind and that is both infuriating and scary for law makers worldwide.  The Internal Revenue Service (IRS) is livid at the thought of a currency that they cannot track or find a way to regulate.  This means that an anonymous someone could pay for a good or service anywhere in the world and be paid by another anonymous person somewhere else in the world.  In turn, this has led to illegal activities using the Bitcoin to mask some of their activities but this is not uncommon with normal currency because criminals are always looking for any way to cheat every financial system.

What is the value of the Bitcoin?

There has been a recent fluctuation of the actual US dollar value of what one bitcoin is worth and this is because it is an emerging currency and just as gold prices go up and down daily so the Bitcoin affected as well.   Because of the volatility of the value, it cannot be said as to how much it is worth right now but it is recommended to visit a few different sites to get an approximate number.

Are people actually using Bitcoins?

There are people worldwide openly accepting Bitcoins for goods or services.   A man in Canada is selling his house for Bitcoins, Overstock.com is now accepting bitcoins, casinos in Las Vegas have ATMs for Bitcoins, and many other electronic data interchange systems.  Some still speculate that this is a passing fad while others see it as the global wave of the future but only time will tell.

How will this affect business?

The day where Bitcoins will affect the day to day business affairs of small shops around the country is nowhere near but what will it look like when it does arrive?  Will we be pulling out a laptop to make a purchase?  Will we be using a Bitcoin-backed credit card?  Will we apply for a business loan to receive Bitcoins to help our businesses?  There all sorts of speculation on the topic with not many facts or case history to back it up.  One thing that is known for sure is that we must all watch this trend and stay on top of it because it could be coming to the main stream faster than we all thought possible.

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Michael Hollis is a writer for First American Merchant, a business loan provider. You can follow First American Merchant on Twitter @1stamericanfund

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