Why So Cryptic?

Cryptocurrency is essentially encrypted digital money. It’s similar to using apps like Venmo or CashApp, except the numbers you see aren’t in dollars.

Much like comparing Euros to American currency, bitcoin has different value. According to Exchange Rate’s currency converter, one bitcoin is equal to $48,098.80 in US dollars.

Unlike physical cash, the value of cryptocurrency isn’t managed or maintained by any government, financial institution, or state. However, it can still be used to purchase goods and services. There are over 5,000 different kinds of cryptocurrency in circulation as we speak (or should we say “read”?), and bitcoin is the most popular one.

How Does It Work?

Bitcoin can be used to make online purchases outside of the traditional financial system. These transactions are quicker, have lower fees if any, and are completed securely. All a new user would have to do to begin using bitcoin is create a CoinBase account, where bitcoin can be spent, earned, bought, sold, and stored. Peers can send bitcoin to each other using what are called cryptocurrency wallets (digital wallets).

The public ledger that bitcoin transactions are recorded on is called a blockchain. Blockchain networks depend on users voluntarily keeping copies of the blockchain, and running bitcoin protocol software. This is how transactions and balances can be proven and kept secure without a third party involved. Even though transactions are public, the identities of the users making transactions are kept private.

If you want a deeper understanding of cryptocurrency, you’ll have to go right to the source.

In 2008, bitcoin’s inventor Satoshi Nakamoto explained the principle of bitcoin in his detailed paper, “Bitcoin: A Peer-to-Peer Electronic Cash System.”

The abstract of Nakamoto’s paper states:

“(Bitcoin is) a purely peer-to-peer version of electronic cash (that) would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.”

Bitcoin & Business

Once you’ve learned what you need to know about bitcoin, business owners can use this cryptocurrency to their advantage in a few different ways.

• Bitcoin makes transactions easy and fast, completed via the internet within seconds. Offering this payment option to customers creates a convenient means of purchasing.
• Because bitcoin is a currency independent of any authority, it allows business owners to make transactions without any waiting, ridiculous fees, or hassle. This makes expanding your client base more feasible.
• Encryption creates more security for consumers, and protects businesses from fraud.
• Unlike credit cards, bitcoin payments do not need to be checked or approved by any institution.
• Having bitcoin as a payment option can separate you from competitors who do not.
• Businesses can choose their own payment fees. (There is no fee to receive bitcoin.)
• The value of bitcoin will never change.

If used wisely, bitcoin can be used to expand your business, increase sales, and widen your potential client pool. Add a solid marketing strategy and creative social media content to the mix, and you’re golden.