Huffpost Business
THE BLOG

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Daniel Burrus Headshot

Will Bitcoin Replace Cash?

Posted: Updated:
Print

bitcoinMove over cash, credit, and debit cards ... there's a new payment method available. It's called Bitcoin--a virtual and digital version of cash that's emerging as a global payment platform that can be used through smart phones, tablets, and other devices. Bitcoin, which is a product of open source intelligence using peer-to-peer technology to operate with no central authority or banks, has the potential to change how millions of people around the world conduct their business.

Looking to buy some tickets to a Sacramento Kings game? You can buy them with Bitcoin. Ready to reserve your seat on Branson's Virgin Galactic flight to space? They accept Bitcoin. How about pay your tuition to St. George's University of London? Bitcoin is legal tender there too. In fact, the first day Bitcoin launched, sales totaled $126,000 (U.S.). Even Amazon and Google are considering adding Bitcoin as a payment option.

The Bank Security Act regulations in this case are intended to prevent transactions through anonymous accounts--think money laundering. However, the Bank Security Act does allow users of virtual currencies such as Bitcoin to buy and sell goods and services. Recently, officials within the United States Treasury and Justice Departments have now recognized the virtual currency as legitimate and financially viable. However, the U.S. government is not accepting Bitcoin for tax or other payments. To solve that problem, a company called SnapCard has come up with a payment system where Bitcoins can be used to pay the IRS.

What makes Bitcoin unique is that there's a record as to who possesses it, and there's a network that records transactions. Additionally, there is no way to increase the number of Bitcoins in existence, which is not the case in other currencies, like the U.S. currency, which the treasury can just print more if needed.

The value of a Bitcoin does fluctuate with the markets. So if you're thinking of investing in Bitcoins, you want to do the same thing you do with a stock, which is to buy low and sell high. But remember, all currencies fluctuate in value on a daily basis, so that's not unique to Bitcoin.

A key breakthrough with the use of Bitcoin will be if and when traditional banks decide to accept it.

Will Bitcoin be around for a long time? That's hard to say because Bitcoin's future represents a soft trend--it is not a sure thing. But the idea of a digital virtual currency that is the closest thing to cash becoming part of our everyday reality in the near future represents a Hard TrendTM--it will happen.

So the next time you're ready to make a purchase online, don't be surprised if you see a Bitcoin option for payment. Digital currency as a long-term Hard Trend is a game changer and thanks to the introduction of Bitcoin, the trend is now in motion.

What are your thoughts about Bitcoin and the use of digital currency? Would you use it? Leave your comments below.