By now, I hope you’ve at least heard about the revolutionary crypto-currency and pseudo-marketplace movement that has created a fuss in the ecommerce industry (and retail in general, really). So what is digital currency? The easiest (while still not very easy) explanation is a form of currency or medium of exchange that’s stored and created electronically. How and why it works doesn’t matter as much as the fact that it does, and it doesn’t look like crypto-currencies are ever going away. For that reason, the idea of digital currencies freaks many people out.
The idea of digital currency began in 2009, when developer Satoshi Nakamoto created the now best-known brand in the game – Bitcoin. Bitcoin is the first digital currency to garnish the attention of governments and companies worldwide and is turning into a billion-dollar market. In fact, since its launch, the value of Bitcoin has continued to grow – as of this writing, a single Bitcoin is worth $640.19.
Here’s the exciting part: Bitcoin is not a company; it’s not controlled, nor can it be, by anyone. That’s the genius in Satoshi’s algorithm and rules. However, being the pioneer is a painful process. New flaws are being discovered in the lower-level parts of the Bitcoin system – but, as anybody in the technology space knows, this is the natural evolution of open software.
After seeing the popularity of Bitcoin, other developers took up the challenge of creating new cryptocurrencies that improve on their predecessor’s weaknesses. My favorite was the COINYE, swiftly sued by Kanye West and ultimately destroyed.
So you might be asking: what does this all have to do with retailers and online commerce? Everything.
Digital currencies are here and won’t go away until someone turns off the internet. These digital coins will have real value and can be transferred to banks. Multiple services already help you accept digital currencies on your site, and high-profile retailers like Overstock and Lord & Taylor are already accepting them. However, don’t just slap a “pay with Bitcoin” seal on your site. I repeat, DON’T RUN OUT AND SLAP A “PAY WITH BITCOIN” SEAL ON YOUR SITE! I think most ecommerce retailers should wait until we see how things play out a bit more before buying it altogether.
Governments are trying to put the smackdown on digital currencies, specifically Bitcoin. But the problem is that there isn’t anybody to go after. Bitcoin is a set of rules, encryption, and instructions, an idea released into the wild that any developer can help grow and improve. There are no doors to kick in. What I believe will happen next is that governments (if they haven’t already) will start hacking and bringing down digital currencies. Some will collapse all the way, others will not. While beneficial for the governments, in the beginning, this process only ensures that developers will harden the battleship and ultimately improve the final evolution of a digital currency until it’s almost indestructible.
Is Bitcoin the end-all-be-all of digital currency? I doubt it. But it will be something. So, ecommerce retailers, ask yourselves: if you’re building a global brand and millions of customers are demanding you accept their digital money, will you take it? Will you take it, even if foreign governments ban its use? What if your government bans its use? A real dilemma if you ask me: but something that must be thought about as this new evolution of money unfolds.