If you're like most Americans, you've heard about Bitcoin and are downright confused by it. If you're from my generation, you may be envisioning men with very thick glasses hunched over an IBM mainframe beaming money up to the Battlestar Galactica. But if you read my columns, you likely love innovation and are eager to learn.
So, in terms earthlings can understand, here are five things to know about Bitcoin:
1) It's e-mail for money. Just like e-mail, no one owns the system on which Bitcoin sits. And just like Google built Gmail or Microsoft built Hotmail on top of the e-mail system, certain companies have made Bitcoin easier to use by building platforms on top of the system.
2) It removes the middle-man. Did you know that every time you use your credit card to buy an ice cream cone there are multiple companies taking a lick before the merchant gets his piece? Bitcoin has no middle-man, hence you don't have to pay one.
3) Bitcoin accounts may get hacked. Bitcoin may be used to buy drugs. Companies that use Bitcoin may go bankrupt. It's not infallible. There is risk, just like anything else you do in life. See what happened to JP Morgan recently? But there are lots of very smart people working to mitigate those risks.
4) It's a volatile investment, with tremendous upside and tremendous downside. It's not for everyone's portfolio. Before you put any money into it, you should speak with a professional advisor who has done his or her diligence. Most haven't, but those that have are members of the Digital Currency Council - a professional association for forward thinking advisors with an expertise in Bitcoin. There will be many vendors creating products/services that will surround this new crytocurrency. Let's see how it all shakes out.
5) Remember when you questioned why anyone would ever need a cell phone unless they were selling drugs on the street corner? But then over time you realized that cell phones could be useful and convenient. The same will happen for Bitcoin. You may not see it yet, but in five years you'll wonder how you lived without it.
Signing off from the Battlestar Galactica flying high above earth, I'm April Rudin. Thanks for reading my blog.
Oh, and did you see that Walter Isaacson of Time Magazine believes Bitcoin will save journalism?