With the New Year barely a fortnight old, Satoshi Nakamoto’s “internet money” – Bitcoin – is likely to come under renewed focus as businesses plan for the months to come. The currency’s popularity has skyrocketed in recent years (Bitcoin’s overall value cracked $1000 (£822) per coin on January 2nd) but does it actually offer any benefits for companies other than instant rapport with the hipsters?
Bitcoin’s greatest strength is that it’s a very consumer-orientated currency, a point that should mean that it’s easy to sell as an alternative to credit cards to customers. However, the currency is shrouded in jargon (“blockchain”, “mining”, “hashing”), which, until recently, meant that Bitcoin was strictly the domain of hobbyists and experts. The only thing anybody really needs to know about the cryptocurrency though is that they can use it like any other real-world currency.
The recent arrival of Bitcoin-only businesses, especially in the world of casino and iGaming) is testament to the ease at which Bitcoin can be bought and traded. Vegas Casino, for example, a site that lets players spend their Bitcoin on blackjack, poker, and slot machines, as well as withdraw winnings in the currency, doesn’t accept traditional currencies at all. The cryptocurrency is so heavily ingrained in the fabric of Vegas Casino’s business that links to currency exchanges and even a Bitcoin “faucet”, a website that trades small amounts of Bitcoin for the completion of Captcha tasks, can be visited with just a click from their homepage. It’s a novel approach to business, but one that’s growing in popularity.
Here’s why: Bitcoin offers immediate, untraceable, and inexpensive transactions for customers, meaning that the currency is rapidly gaining traction in countries stuck with usurious interest rates and similar financial barriers to trade. It’s also virtually immune to chargebacks or reversed transactions, a tactic sometimes used in instances of credit card fraud. Finally, there’s no need for consumers to hand over sensitive details to make a transaction.
Many of the same advantages apply to companies too, with low costs arguably being one of the most significant. However, Bitcoin’s greatest gift to the world of business may have nothing at all to do with spending money. The technology behind the currency, blockchain, is readily separated from finance and has applications in providing a nearly impenetrable “vault” for the storage of customer details.
It’s a cynical point but there’s more than enough evidence that modern companies – even giant corporations – sometimes do not show enough regard for the sanctity of their customer’s data. Website hacks, in which millions of records are stolen, are relatively commonplace now, despite the fact that they didn’t really exist on a global scale until 2008. Moreover, cybercrime is becoming savvy enough to be able to make up new types of attacks.
In the past, hacking attacks were often done by “script kiddies” or coding novices for no reason other than personal entertainment, but things have changed now. A site’s theme or purpose is now irrelevant; data security is a concern for everybody. It’s easy to see why somebody might hack the Clinton Campaign but fast food joints and Christian dating websites aren’t very interesting in comparison. However, both are susceptible to attacks nowadays, which often have financial or disruptive purposes rather than mere entertainment behind them.
Blockchain comes into its own on that latter point. The technology stores records in organised chunks and distributes them across a vast network of computers (imagine one giant spreadsheet saved in identical copies in thousands of different locations). As each chunk or “block” is verified against every other block in the chain, falsified records stand out, fail authentication, and are automatically removed.
Considering that, blockchain is an immutable database; things cannot be added or taken away unless there’s a consensus on the network. The invention, also by Nakamoto, has noted applications in healthcare (a central patient database could eliminate duplicate, inaccurate records across practices) and in industries blighted by forgeries, such as precious stones.
Bitcoin’s advocates are predicting that the currency’s true ascendency will come under the reign of President Trump. With around $14bn (£11.5bn) worth of Bitcoin on the market at present, though, there’s already a financial incentive for getting on board with the currency and its associated blockchain technology.