Bitcoin has taken a huge hit in recent days but it is still a billion-dollar currency on a wild up-and-down ride and Silicon Valley, financial institutions, commodity traders and others are paying attention.
For those who don't know, Bitcoin is "a decentralized digital currency based on an open-source, peer-to-peer Internet protocol." It's a virtual commodity, or virtual currency, whichever way you look at it.
For consumers, it works something like this: You download a 'wallet' app on your smartphone. You then pay for your dinner by scanning your square bar code and send the money. Boom, it arrives an instant later. And now there's even Bitcoin ATMs. Oh, and the transaction fee is less than credit or debit cards.
Who's living the Bitcoin life? The Winklevoss twins, for one. They were famous for suing Mark Zuckerberg and Facebook, but now, according to the New York Times
The Winklevii, as they are known, have amassed since last summer what appears to be one of the single largest portfolios of the digital money, whose wild gyrations have Silicon Valley and Wall Street talking. The twins, the first prominent figures in the largely anonymous bitcoin world to publicly disclose a big stake, say they own nearly $11 million worth.
There's also tons of people giving examples of Bitcoin being used to purchase goods, pay people, and transfer money. Think Cyprus, for example.
Virtual currency is not new. All that virtual stuff you can buy in Farmville or Texas Hold'em, etc., is an example of paying real money for not real, or virtual stuff. What makes Bitcoin different is that it's being used as a form of payment and is being traded on the global markets as a currency.
Is this the modern version of the Tulip Bubble? Maybe. Here's the link to a video explaining bubbles and the Tulip bubble, in case you don't know. Tons of people compared the dot-com bubble to the Tulip bubble 15 years ago.
What might be more interesting for governments is the tax revenue opportunity from a solid virtual currency. How would you like to pay real money for virtual capital gains? Turns out both South Korea and China have already decided that virtual currency is equivalent to real currency, and therefore collect tax.
Cybermoney is one of the hottest topics in finance, venture capital, gaming, payments, and more. We'll be watching the Winklevoss twins to see how it turns out. We wrote about this in The Power of Real-Time Social Media Marketing -- so check it out.
Beverly Macy is a speaker, educator, and author. You can reach her via email at beverlymacy@gmail.com