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By Tom Geller | Monday, August 11, 2014

Does Bitcoin Matter?

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I love creating courses for lynda.com because I get to introduce the site’s curious and intelligent members to subjects I’m passionate about. The content editors at lynda work hard to make sure every course is relevant and useful to its members.

So when I proposed my course, Up and Running with Bitcoin, they had questions. Does Bitcoin matter enough now? Will it matter a year from now?

I struggled with these questions myself when I first learned about Bitcoin, probably around mid-2011. At that time I was unimpressed, and I’d seen plenty of other “online money” projects come and go. But Bitcoin eventually changed my mind by proving itself a worthy competitor to other financial systems, and by opening up entirely new ways to pay and get paid.

If you heard about Bitcoin during its troubled first few years, or only know of it through old news reports, here’s why Bitcoin matters now:

Bitcoin is usable

A couple of years ago, setting up a Bitcoin wallet was a major chore. The details were written in geek speak, and it was hard to get bitcoins unless you either dealt with shady characters or put your computer to work “mining” them.
But anybody can get into Bitcoin today. There’s a large selection of wallets, and reputable, well-funded exchanges have mostly crowded out the crooks that dominated Bitcoin’s early scene. There are even ATMs!

Bitcoin has utility

The first known “real-world” Bitcoin purchase (for two pizzas) only happened when another Bitcoin enthusiast brokered the deal. But now there are thousands of merchants who accept Bitcoin directly—and many more when you use them to buy Gyft or eGifter cards.

Further, Bitcoin is used in ways that other payment systems can’t match. For instance: Shortly after Up and Running with Bitcoin published, someone sent me a $10 “thank you” tip via an online comment.

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Bitcoin has also enabled “micropayments” to allow, for example, a content creator to charge 15 cents for access to an article—with manageable fees and no middleperson.

Bitcoin is (relatively) stable

One of the biggest criticisms of Bitcoin is that its value has had crazy highs and lows. Aside from its three major “spikes”—whose endings were each accompanied by media proclamations that Bitcoin was “crashing”—it’s been fairly common to see daily price variations of 10 percent.

But both the spikes and the daily fluctuations have calmed down, and have even become predictable. And with each spike, Bitcoin comes back strong. It still hasn’t topped the $1,147 apex of the December 2013 spike; but as I write this, it hovers around a respectable $590, well above the $450 price when I recorded the course in April.

Notably, Bitcoin is now more stable than some national currencies, and has become a financial haven for people living in those countries. Argentinians, whose country has averaged over 200 percent annual inflation since World War II, have taken strongly to Bitccoin, as have people of China, despite stringent trading regulations. Bitcoin is also popular with anyone sending money across borders—an expensive or impossible feat in some places.

Coinmap.org shows places all over the world where Bitcoin is accepted.

Coinmap.org shows places all over the world where Bitcoin is accepted.

So does Bitcoin matter? It’s hard to believe it does—if you consider only daily purchases, and have no need to store savings or transfer funds internationally.

But as we increasingly reach out to each other online and across national boundaries, it’s equally hard to believe it won’t matter more in the future. And for its current usability, utility, and stability, Bitcoin already matters today.

For more on Bitcoin, watch my course Up and Running with Bitcoin on lynda.com.

 

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