PayPal endorsed Bitcoins and revealed yesterday that they will allow merchants to accept bitcoins otherwise known as Virtual money, as a payment method through their PayPal payments Hub Service.
This is a bold move from the Payment Processor Giant, does that mean going forward you can buy goods and services by using virtual currency?
Bitcoins, what is it?
Bitcoins otherwise known as Virtual Currency was developed by an unknown person using an alias named Satoshi Nakamoto in 2009 . The currency is generated by a process called “mining”. They are generated by a competitive and decentralised process using specialized hardware by miners and in return being rewarded with bitcoins.
Bitcoins are traded via bitcoin market places called ‘Exchanges’. There is no tie to a region or any country. There are no fees or charges on exchange or transactions. Users can trade or send bitcoins using mobile apps or web. Transactions can be anonymous, logging only the bitcoin id. Once you purchase bitcoins, they can be stored in a digital wallet either on the cloud or in your computer.
Bitcoins are not insured by FDIC
Paypal announced yesterday that they will be allowing merchants to accept bitcoins via its Paypal Payments Hub Service. Paypal announced their initial plans to offer this service to North American merchants selling digital goods such as games, music files, eBooks and apps. Other companies who have announced similar plans to accept bitcoins are: Overstock.com, Expedia, Dish Network etc
How ever in the announcement, there is no mention of eBay allowing bitcoins in their marketplace.
As bitcoins are getting more and more popular, will bitcoins one day replace paper currency?
Lot of traditional Bankers and Financial analysts calls bitcoins not as a currency, at least for now. Even IRS agreed with them by concluding bitcoins legally as a property rather than a currency. As more and more mainstream businesses and media embrace this currency form, it will eventually get commercialized and accepted world wide.
One major advantage: it eliminates the risk of credit card fraud. Another one: bitcoins allow you to make micropayments. It is near impossible to transact payments less than a dollar even to few cents, in todays banking system’s gargantuan charges and fees. Bitcoins can currently handle down to 8 decimal points after the dot. The biggest of all, International transactions can be made easy via bitcoins opening borders for commerce without the chains of Banking systems.
Bitcoins grew so fast, that today almost no country’s regulatory systems for banking and payments have proper guidelines on Bitcoins. Majority of the countries have either legalized or banned trade of Bitcoins. Here is a list of countries that accepts or legalized bitcoins trade http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country
From Our desk: I am as every one is excited about the growth of bitcoins. Once regulatory reforms are passed and implemented, I see bitcoins growing into a legalized Digital currency one day where we can trade with REAL digital money. Without Borders. Without Limits!