• by Drew Hendricks , January 30, 2014

The Internet has revolutionized almost every sector of the economy, but none more so than banking and retail. Thanks to online commerce, the methods of exchanging funds for goods are completely different than from most other eras.

It makes sense that a new, digital currency would be developed: BitCoin.

The Basics of Bitcoin

BitCoin is akin to traditional currency, like cash or gold, in the sense that it's an inanimate object with value and can be exchanged as online payment for goods or services. However, this digital peer-to-peer payment system is not regulated by any government, but instead by cryptography. Bitcoin is also entirely electronic, meaning there is no physical bitcoin, and exchanged only using software.

BitCoins are comprised of mathematical equations and high-tech software. There are only 21 million, never more and never less, of them in existence. And that's all there ever will be. While they still pose a risk for hacking and theft, they're more anonymous and difficult to obtain. This makes federal agents particularly wary of the currency, especially when its use on the Silk Road and the Darknet are considered.

What's the appeal?

While they might sound like a complicated and silly measure, BitCoins are far too valuable to be considered anything less than appealing, especially as it becomes more commonly used and widespread. Today, you can buy lunch from a food truck or a plane ticket using the virtual cash. You can use them without any personal information.

For example, if you want to shop on Overstock or Amazon using a BitCoin, you can do it without presenting any personal or financial information online. This means that, even if bitcoins can be stolen without any chance of chargebacks, thieves would be kept far from their victim’s personal information, making it much harder to steal someone’s identity.

Hackers are unable to get at your private information through BitCoins, because it's simply not linked to the funds. This is much different from when you enter your credit or debit card information online and it's stored by a store's computer system, which is vulnerable to hackers.

Is this a real option?

According to Will O'Brien, a corporate developer at Big Fish Games and now CEO of BitGo.com,  which developed free wallet tech, BitCoins are an entirely viable option as a means of exchange in the digital era. You can use it on mainstream sites, like Zynga or Overstock, and it has continued to thrive, despite the U.S. government shutting down the Silk Road and seizing more than $28 million USD in bitcoin.

Even former Federal Reserve Chairman Ben Bernanke backs the potential of BitCoin as a viable payment option to keep securities safe and financial losses low.

What you need to know

If you're an entrepreneur, now is the time to begin using and investing in the currency and the technology that will support it. As more major companies and big brand names become a part of this monetary entity, its value will increase. As an entrepreneur, you know that capitalization is always a good idea. It's basically profit in your wallet.