Recently I set up an
account on Coinbase so that I can conduct transactions in bitcoin. If you don’t
know what either of those terms - "Coinbase" and "bitcoin" - means, then that probably means that your curiosity has not peaked with recent news coverage and so there is probably no point in continuing
to read further. But if you are aware of bitcoin and might have been wondering
whether "regular people" can be involved, this blog post might be
useful.
I got involved for two reasons. First, diving into technology ahead of the curve has actually been an important contributor to my career to date and so this
move in in step with my modus operanti regardless of any practical outcome. Second, I've been frustrated with the
costs of using traditional payment systems (Visa, MasterCard, Amex) for my small
businesses. We recently started adding a 4% surcharge to defray part of the
cost of electronic payment systems as allowed under NJ law). But I also want to
provide customers with a lower cost option to make electronic payments and
avoid this charge.
Will I use it?
I will use bitcoin to purchase a product or service whenever the opportunity may first arise. This will be more out of curiosity and novelty than anything else. I don't know of any product or service I use that accepts bitcoin. For now, I'll probably keep a balance of less than $100 dollar value in my bitcoin account. (That translates to less than one bitcoin). I was disappointed to see that the commission or "spread" for purchasing bitcoin on Coinbase.com was about 3.5% compared to spot market prices this week. That's too high and IMO will stifle the growth of bitcoin if the spread does not narrow in the future. But it may be lower in the future and for now, in my tiny experiment, it works out to about the same as an ATM fee.
I don’t expect any of my customers to pay with bitcoin anytime soon. I just want to have it
available and ready for the future when they make the venture.
Is it safe?
We are told it is
safer than traditional U.S. electronic payments. That's all a consumer really
knows. I like the fact that Coinbase uses two step verification and makes me log in using a code sent to my mobile phone eachtime I access the online account.
Is the currency stable?
No, IMO. Think of it
like buying a share of stock. The price will fluctuate. In fact, the week I wrote this blog was a highly volatile period of bitcoin pricing due to the collapse of a bitcoin exchange overseas. Yet I think that I understand that these fluctuations are going to be insignificant to me as a bitcoin user.
What is involved to get started?
Be prepared to give
Coinbase a good bit of your personal information in order to open and verify the
account. Other people have commented on the extent of data they need to reveal
just to open an account. The myth that bitcoin is an anonymous currency system is simply not true if you are dealing with Coinbase. Setup involves two step
authentication with your regular bank so your account may not be ready to
operate until the next day.
Why Coinbase?
There is no
compelling reason to choose Coinbase over other digital wallets. We read that
they are the leaders in bringing this new technology to the public. Coinbase is
a digital wallet that acts as a clearinghouse or as a sort of banker in the
transactions.
What can I buy with Bitcoin?
If you live and
conduct in-person transactions outside of California, apparently not much yet.
But that will likely change over time. There is a growing list of online
merchants who accept bitcoin but I haven't dealt with any of them yet.