What is Bitcoin?

Shannon Andrade |

April 24, 2013

Bitcoin

Bitcoin is an open source person-to-person (P2P) digital currency that enables instant transactions and worldwide reach all without financial intermediaries and with zero or low processing fees. One of the first implementations of the ‘crypto-currency concepts’, the self-proclaimed ‘first global neutral currency’ has garnered a lot of media attention over the past few weeks, primarily due to the currency’s three-fold rise – and then fall – in value.

With Bitcoin individuals buy ‘bitcoins’ with cash and then use them to trade/buy goods online or transfer funds to others. To get started individuals simply choose a Bitcoin wallet and then establish their Bitcoin address (similar to a physical address or email), which serves as their unique identifier for their digital currency transactions. Bitcoin enables individuals include the ability to send payments anywhere and at anytime. And, exclusive of very small micro-payments, it’s free – that is unless you select to pay a voluntary fee to increase your transaction priority. Interestingly, unlike some of the more traditional P2P payment options, transactions made via Bitcoin are anonymous and nearly untraceable, opening up the network to some unfavorable comparisons with ‘back alley transactions’. 

The network is also looking to attract new businesses, promoting zero transaction fees, no chargebacks (Bitcoin payments are irreversible), global reach (e-commerce) and no PCI requirements (secured by the network).

As of February 2013, the network – active for some 45 months – boasts over $1 million of US daily trade volume through just over 40,000 transactions. They also note a total value of all Bitcoins in circulation at just over $300 million 

In an interesting position, Bitcoin could very well gain momentum in the ever-expanding world of mobile payments. Of course, they’re not the only game in town, but with a renewed focus on standardizing, promoting and protecting Bitcoin through the Bitcoin Foundation, and investor backing, they certainly offer an additional option for digital payments and monetary transfers.

New mobile applications continue to enter the payments marketplace servicing a wide variety of needs for merchants and consumers alike. With dozens of entries flooding the space each month, it’s our goal with, what has now become our ‘What Is’ series, to provide brief overviews of many of the new apps available. Giving merchants and developers an up-to-date look at the opportunities and technology currently available to them in the market today.