What is a Bitcoin really worth and can you make use of it in the real world? asks Jake Smith.
Recent news headlines have been dominated by Bitcoin and rightly so, when the value of something increases by 100% in a single day, who wouldn’t want to know about it! However, instead of analysing whether or not Bitcoin is a sound investment and to avoid adding to the hysteria of the Bitcoin bubble, we take a look at it from a different angle; can Bitcoins be used to pay your bills?
First of all, let’s decipher what on earth both Bitcoins and cryptocurrency are. In its simplest form, Bitcoin, like money is an accounting system. An electronic cash system that is fully peer-to-peer, with no trusted third-party or central depository. Cryptocurrencies are digital currencies that are secured using complex algorithms, known as ‘cryptography’. Bitcoin was the first cryptocurrency powered by Blockchain software technology – a tracking system.
Essentially, Blockchain acts as a public ledger that records and verifies all transactions chronologically. The digital recording of value and transactions is permanent, but people’s identity remains anonymous. The open ledger replaces the need for a third-party facilitator i.e. banks and governments. What this means is that there is no control by a single institution, rather the control is put back on the network of users. Money is easily transferrable and executed from peer-to-peer. The concept also removes associated fees, inefficiencies, risk and the potential for corruption that come with centralising information as a third-party.
Ironically, the first bitcoin was created in January 2009, just months after the global financial crisis (GFC) struck. Since launching, many new cryptocurrencies and alternative coins ‘altcoins’ and ‘tokens’ have been created using similar Blockchain technology.
Australian retailers are increasingly adding digital currency as an accepted means of payment. At the time of writing, there were approximately 15,000 worldwide retailers accepting cryptocurrency, 264 of whom are based in Australia, according to Coinmap.
Some of the things you can spend your Bitcoins on include:
Coffee and pastries
Travel and flights (Expedia)
Software and electronics (Microsoft)
Energy, gas and electricity
There is a growing list of goods and services available for purchase using cryptocurrencies, which you can discover using Bitcoin.com’s search platform. More specific to Australia, a number of bills can indeed be paid using Bitcoins through various websites. One of the more popular websites is “Living Room of Satoshi”, which is a Brisbane-based start-up enabling people to easily make credit card, BPAY, or direct bank account payments using a dozen different types of cryptocurrency.
Merchants and individuals are flocking to Bitcoin as the cryptocurrency gains more and more mainstream appeal. The longer bitcoin hangs around and continues to make headlines, the more comfortable people are going to become with digital money – more directly, confident in the notion of using bitcoin for day-to-day exchanges.
Further developments, particularly to Blockchain technology, will add legitimacy and user-confidence for existing and prospective participants of the Bitcoin world. However, without regulation and safeguards for the virtual currency, it’s difficult to see Bitcoin taking over traditional conventions of trade. Although if you’ve got bitcoins to spend there’s a number of sites that cater for the crypto-payment option, feel ready to use them to make a purchase or square your outstanding bills.