Bitcoin Quick Introduction

Bitcoin is all of these
: An asset you can buy and hold, almost like gold and silver, AND

: A foreign currency, almost like the Swiss Franks they use in Switzerland
: A payment technology, for instant payments

If you think this is confusing, you should see how the U.S. Government deals with it

: The IRS calls Bitcoin property or assets

: The SEC calls Bitcoin money : The CFTC calls Bitcoin a commodity : The Treasury calls Bitcoin a currency

Confusing, to be sure!

Further, uneducated people allege that "Bitcoin is used only for crime" and "Bitcoin is a Ponzi scheme". Please read further down.

You can benefit from Bitcoin by focusing on a THREE KEY CONCEPTS. Just like you can use your smartphone without understanding every microcircuit, regular people can use Bitcoin technology without having to understand its every facet. (Engineers, IT people, cryptographers: The technology is wide open; you may start here.)

KEY CONCEPT #1: Bitcoin's value fluctuates. Just like people exchange US $s for Swiss Franks, people exchange formal state currencies for Bitcoin. You can see the formal Bitcoin exchange rates here:

http://www.bitcoincharts.com/markets/
For the Bitcoin markets in U.S. dollars, you can go here: http://www.bitcoincharts.com/markets/currency/USD.html

KEY CONCEPT #2: Bitcoin's value does not matter if you use Bitcoin for payments via a Bitcoin Service Provider. That's right: The BSP absorbs all the risk that arises from the value fluctuation. Example: Say you are a merchant accepting credit cards, and a customer is to pay $100. If your customer uses a credit card, you will get $100, but you neither know nor care how your customer pays the credit card company; it could be, say Mexican Pesos. If the exchange rate of the peso to the dollar fluctuates, that is not affecting your end of the transaction. Accepting the $100 in Bitcoin via a BSP in some ways the same: The BSP puts $100 in your bank, and you neither know nor care how much Bitcoin that was. That, by the way, is the only similarity; in all other ways Bitcoin is better: It cannot be retracted, and the fees are orders of magnitude smaller. The two largest BSPs in the US are Bitpay and Coinbase (we are not affiliated with them or any other BSP). The benefit is particularly large if you are in a cashflow-sensitive industry.

Corporate A/R Departments: Using a Bitcoin to receive payments (directly or via a BSP) means that payments can reach you instantly, without waiting for U.S.P.S. to deliver the checks. The funds can be used instantly to pay your bills, without waiting for banks to clear them.

Corporate A/P Departments: If your payees use Bitcoin you do not need to buy check stock, print, or pay for postage in order to pay these payees. Nor will you ever have to balance the checkbook afterwards - payments are settled quickly. Demand and earn substantial discounts for such immediate payments, whether you use a Bitcoin directly or via a BSP.

KEY CONCEPT #3: Bitcoin's value matters only if you hold bitcoin. Are you looking for a RISKY asset that you can buy and hold, like gold and silver? Can you tolerate the value of your investment possibly decreasing, possibly to zero? If yes and yes, maybe a small diversification into bitcoin is right for you, because Bitcoin is more portable, costs less to safeguard, its ownership is transparent on the web, and is vastly undervalued compared to precious metals. You must fully understand the risks, rewards, and timing. If, after that, you decide to invest in Bitcoin, you then have to decide if you will do so via a counterparty that will hold your Bitcoin for you or do it yourself, with your own wallet, etc.

Please note that there are two uneducated allegations that distract from Bitcoin:

UNEDUCATED ALLEGATION #1: "Crime". Bitcoin is used as money, among others. Just like other forms of money (cash, gold, diamonds, etc.) Bitcoin has been used for illegal purposes, as well. Yet, these other forms of money are far more suitable for crime, because they are untraceable: Bitcoin transactions are recorded forever on the web. If long account numbers do not scare you, click here to watch these transactions get recorded in real time.

UNEDUCATED ALLEGATION #2: "Ponzi". Ponzi is when someone owns and asset outright and disperses it to others. Bitcoin expressly avoids that with the concept of mining: A large chunk of Bitcoin has not been mined yet precisely for that purpose.

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