Bitcoin: A Challenging Currency?
Uncertainty around global economic markets has driven a resurgence of interest around crypro-currencies such as Bitcoin in recent months. In fact Bitcoin ended 2016 with more gains than every major currency, stock index and commodity.
The list of companies now accepting Bitcoin is increasing daily; including retailers, digital service providers, online dating sites, gaming platforms and more. Global household names include Microsoft, Virgin Galactic, Expedia, Steam, BigFishGames.com, and Tesla.
There are several factors at play in Bitcoin’s resurgence, as well as the poor performance in other economic markets.
Bitcoin and Trust
Trust is a significant driver. In the early days Bitcoin’s anonymity deterred many consumers who considered it to be a ‘black market’ currency. Now, Bitcoin has shaken off this reputation as more ‘normal’ transactions are occurring, and consumers have become more accustomed to this alternative payment method.
Subsequently, this increased demand has resulted in Bitcoin’s prices stabilising and rising – as we have seen in recent months. People are investing in Bitcoin all over the world and this is helping to manage fluctuations in prices and drive the value of the currency upwards.
Security is Bitcoin’s USP and this is also driving demand and building trust amongst consumers. As trust in the established financial services industry has taken a severe hammering in recent years, consumers have become more accepting of alternative solutions. Consumers are also nervous about the risk of fraud in the banking sector and especially for card payments, and therefore Bitcoin offers a much more secure option.
The financial services industry continues to try to get its head around blockchain and Bitcoin. With the potential to remove the middleman (banks and financial services institutes) completely, traditional business models must innovate or otherwise risk becoming redundant.
Many financial services firms are investing in crypto-currencies, putting funds into Bitcoin and blockchain start-ups. Coinbase, Chain, Digital Currency Group, Digital Asset Holdings, Ripple – amongst others – have all been beneficiaries of incumbent FS investment.
Should You Be Accepting Bitcoin?
With increasing consumer demand many merchants are offering both online and in store transactions using Bitcoin. Online retailers and digital service providers can integrate Bitcoin into their payment process using 3rd party suppliers or through their payment service provider. For example by using providers like Coinbase – a crypto-currency eWallet provider – that allows consumers to buy and sell Bitcoin, and also make purchases online and in store with their Bitcoin wallet.
Of course Bitcoin is not the only crypto-currency, there are other players in the market. For more on this you might like to read our post Digital Currencies: Which One Will Be “The Next Big Thing”?
If you would like to explore cryptocurrencies in more detail with a member of our team, please get in touch. Call +44(0)808 159 3453 or email [email protected]