It’s official: the first U.S.-based bitcoin exchange launched today at 9 a.m., providing a place for both individuals and institutions to trade bitcoin and monitor its pricing in real time.
The unique thing about bitcoin is that it’s a payment system that nobody owns. It’s completely controlled by all bitcoin users around the world.
From a user perspective, bitcoin is pretty much like cash for the Internet. A bitcoin wallet functions as a mobile app or computer program that allows users to send and receive bitcoins instantly (almost like Venmo, but with a virtual currency). The value of all bitcoin is currently $3.2 billion, a substantial increase since its inception in 2009.
Millennials are leading the charge in adapting the new technology. According to CoinDesk, “millennial consumers see the most promise in digital currencies like bitcoin, with 13 percent of them already using digital currencies on a daily basis, and 26 percent reporting that they would likely use them in the future.”
Security and Stability Efforts
The infrastructure that supports bitcoin has been growing rapidly, with startups seeing investments to the tune of $106 million from the New York Stock Exchange as well as various venture-capital firms and banks. That infrastructure means that previously volatile Bitcoin boasts an all new level of security, starting to assuage fears following the Japan-based Mt. Gox exchange collapse resulting in 650,000 lost bitcoins and a security hack at Slovenia-based exchange Bitstamp.
“Bitcoin has been sorely in need of something like this,” explains Campbell R. Harvey, a Duke University finance professor and expert on digital currency. “To have an organized exchange that has the backing of thoughtful venture capitalists and investors addresses one of the main problems with bitcoin: its extreme volatility.”
If all goes well, bitcoin could change the face of virtual currency exchange in America. The currency can already be found in 2.2 million consumer “wallets” and nearly 40,000 merchants accept the digital currency, including e-commerce giants Overstock.com and Expedia.
There’s further reason for us penny-pinching millennials to love bitcoin. The currency is one of the first to allow the seamless exchange of micropayments (payments less than $1.00) that traditional payment networks can’t support due to cost. In fact, over 30% of the transactions that utilize bitcoin are $1.00 or below.
These micropayments would allow Internet users to “microtip” their favorite music artists or donate to various charities online, instantly and seamlessly, without significantly affecting their personal budgets. As the Huffington Post notes, micropayments could turn the world of online advertising on its head, given viewers the new option to microtip their favorite posters instead of sitting through a YouTube ad. This would mean a revolution in what it means to purchase something on the Internet, reinstating a lost sense of independence and privacy for web users.
Experts expect to see bitcoin’s disruptive potential extend into various sectors, including viral marketing, brick-and-mortar retail, publishing and e-commerce, as many businesses will be able to reach new markets previously untapped due to payment issues.
Catch the full rundown over at the Wall Street Journal.