Bitcoin: Fad or The Future of Currency?

BitcoinFad or The Future of Currency?

Latest HeadlinesCounterterrorism Program Names Virtual Currencies As Area Of Interest

China Construction Bank shuts down bitcoin, litecoin transactions

State regulators issue virtual currency warning

Bank of Canada unconcerned about growing popularity of bitcoin

Wisconsin State Assembly Candidate Accepts Bitcoin Contributions

Wisconsin Government Accountability Board Forces Candidate To Return Bitcoin Donation

New York casino offers latest virtual currency site

MasterCard is paying lobbyists to concentrate on Bitcoin and mobile payments.

Buying Beer With Bitcoin is Legal in California

Ohio Bans Buying Booze With Bitcoin

2014 Tesla Model S91.4 Bitcoins ($103,000)December 12, 2013

2014 Lamborghini Gallardo LP560-4216.843 Bitcoins ($209,995)December 13, 2013

Two bedroom apartment, Olso, Norway 5,600 Bitcoins ($680,000)October 29, 2013

NASCAR Sponsorship67,000,000 Dogecoin ($55,000)March 25, 2014

10,000 Bitcoins ($25)May 22, 2010

“I'll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day.

I just think it would be interesting if I could say that I paid for a pizza in bitcoins ”

James GagliardiJames Gagliardi is Vice President of Product and Innovation at Digital River. He is responsible for the strategy behind the company’s global product roadmap and ensuring its suite of cloud commerce products and solutions meet, exceed and anticipate the needs of Digital River’s world-renowned clients.

Views and opinions expressed here are my own.

http://jamesgagliardi.com

@jamesgagliardi1LC2QvM8zrhtD57ewygsRnJZK65nCE3DuG

Digital River

http://www.digitalriver.com

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Virtual Currencies

Virtual Currencies“An unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community”- European Central Bank

“A medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency” - US Department of Treasury

http://en.wikipedia.org/wiki/Virtual_currency

Virtual Currencies

GOA

Virtual Currency

U.S. Dollars

Real Goods & Services

Virtual Goods & Services

Closed Flow

Virtual Currency

U.S. Dollars

Real Goods & Services

Virtual Goods & Services

Hybrid

Virtual Currency

U.S. Dollars

Real Goods & Services

Virtual Goods & Services

Open Flow

Closed SystemSuper Mario Bros.

100 coins gives Mario an extra life

Semi-Closed System

Hybrid SystemChuck E. Cheese’s Tokens and Tickets

Hybrid SystemChuck E. Cheese’s Tokens and Tickets

Hybrid/Open SystemDelta SkyMiles

Open SystemSecond Life – Linden Dollar

Abandoned Currencies

Microsoft PointsMicrosoft Points

Users' existing Microsoft Points will be converted into a currency amount equal to or greater than their current Points balance.

Facebook Credits

Canadian Digital CurrencyMint Chip

Failed and Abandoned Virtual CurrenciesFlooz (1999-2001)

Beenz (1998-2001)

E-Gold (1996-2009)

InternetCash (1999-2001)

DigiCash (1990-1998)

CyberCash (1994-2001)

Microsoft Points (2006-2013)

Facebook Credits (2009-2012)

Canadian MintChip (2012-2014)

Bitcoin

Decentralized Virtual CurrencyBitcoin is a peer-to-peer payment system that is not controlled by one central authority.

Cryptocurrency coins are "mined" with computers by solving complex mathematical equations called "hashes".

Bitcoin2008: Bitcoin.org registered

2008: Satoshi Nakamoto published Bitcoin: A Peer-to-Peer Electronic Cash System that describes everything you need to know about Bitcoin

2009: Open Source Software Launched

2010: Mt.Gox, Bitcoin exchange was established

2010: Silk Road Launched

2011: Wikileaks started accepting BTC donation

2011: EFF Stops accepting Bitcoin

2011: First Bitcoin conference

2012: Wordpress accepts Bitcoin

2013: First Bitcoin ATM unveiled

2014: Overstock.com begins accepting Bitcoin, $124,000 in sales on first day.

2014: Mt.Gox, loses 800,000 bitcoin

http://historyofbitcoin.org/

Bitcoin vs. bitcoinsSystem, protocol, community currency

Bitcoin CurrencyBTC/XBT1 bitcoin = 1 BTC

1 cBTC = 0.01 BTC

1 mBTC = 0.001 BTC

1 μBTC = 0.000001 BTC

1 satoshi= 0.00000001 BTC

$4.00 = 0.009324 BTC$4.00 = 9324.00 Bits (μBTC)

Dominican Joe Coffee Shop

Bitcoin CurrencyExchange Rate

CommodityBitcoin is actually a commodity with its own fluctuating value, like a stock or bond.

The proper way to think about Bitcoin for now is not as a currency, due to its lack of price-stability, but rather as a commodity

- Salil Deshpande, Managing Director at Bain Venture Capital

Scarcity helps drive up the price of a commodity. Food prices rise when a drought chokes off supplies, for example, and bitcoin has its scarcity built in.

Bitcoin has been classified as a commodity in Finland after the Scandinavian country’s central bank declared that it did not meet the definition of a currency.

Bitcoin System

WalletMining Transferring Blockchain

MiningMiners bring new Bitcoins into the circulation through a complex mathematical and computing process.

The total number of Bitcoin is capped at 21 million BTC.

Wallet

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Wallets are computer files that hold bitcoins.

Similar to how emails are sent between email addresses, bitcoins are sent between wallets.

Each wallet has a unique address that distinguishes it from other wallets.

If you lose the address, that Bitcoin is lost to you forever.

TransferEmail or Bitcoin Address

TransferQR Codes

BlockchainThe blockchain stores a public leger of every transaction made. It is used to verify transactions and prevent fraud and double-spending, making Bitcoin secure.

Bitcoin transactions are generally irreversible, and users could lose their principal if they hold onto bitcoins for an extended period of time.

How to buy Bitcoin

Bitcoin ATM In-PersonOnline Exchange

In-Person

Bitcoin ATM

Bitcoin ATMAuthentication Requirements

Email Face Palm Print Government ID

Bitcoin Online ExchangeMt.Gox

Bitcoin Exchange

Buying BitcoinVerification Method

Buying BitcoinVerification Method

Buying BitcoinLink A Bank Account

Buying BitcoinVerification Method

Buying BitcoinVerification Method

Silk Road

Using Bitcoin

Vending MachineMarijuana vending machine accepts Bitcoin

Paying with Bitcoin

Paying with BitcoinNotable Brands

Paying with BitcoinOverstock.com

YelpAdds Bitcoin

Bitcoin Debit CardXapo debit card

Alternatives

CryptocurrencyName Market Cap Price

1 Bitcoin $5,511,150,639 $432.88

2 Litecoin $286,348,565 $10.19

3 Peercoin $43,851,072 $2.05

4 Ripple $39,426,230 $ 0.005202

5 Dogecoin $34,645,538 $0.000455

6 Nxt $22,512,348 $0.022512

7 Namecoin $17,674,551 $2.04

8 Mastercoin $17,587,609 $31.23

9 BlackCoin $9,271,423 $0.12

10 DarkCoin $7,037,259 $1.67

Credit Card

PayPal

Amazon

Apple

Google

Facebook

Carrier Billing

Wire Transfer

Bitcoin

ADVANTAGES

Low transaction fees

Fewer risks for merchants

Security and control

No Risk of “Charge-backs”

Global

DISADVANTAGES

Consumer onboarding difficulty

Wallets Can Be Lost

No Buyer Protection

Volatility

Regulation uncertainty

Bitcoin is property, subject to capital gains

Sound OffQuestions, Comments, Thoughts

ReferencesBitcoin

http://bitcoin.org

TryBTC

http://trybtc.com

Coindesk

http://www.coindesk.com

History of Bitcoin

http://historyofbitcoin.org/

BitLegal

http://www.bitlegal.io/

United States Government Accountability Office

http://www.gao.gov/assets/660/654620.pdf

Internal Revenue Service

http://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidance

Financial Crimes Enforcement Network

http://www.fincen.gov/news_room/testimony/pdf/20131119.pdf

BitcoinFad or The Future of Currency?