The word “bitcoin” has been thrown about a fair amount since it first came on the scene in 2008, and has been growing in popularity and use worldwide. With businesses embracing bitcoin, as well as other cryptocurrencies, is it time to accept that we’re in a new business era of digital payment?
What are Cryptocurrencies?
First and foremost, it’s important to highlight the difference between “cryptocurrencies” and “virtual currencies”:
“Virtual currencies” covers the credits you buy on Facebook to throw a sheep at someone, the Pokécoins you need to buy Poké Balls, and the stars you have to get to buy designer clothes for Kim K on her app. In real life, you can’t walk into your local supermarket and buy the weekly food shop with K Stars.
A cryptocurrency can be used to buy products that can be used in real life, not just in virtual reality. Here’s a technical definition for you:
There are now close to 1,000 different cryptocurrencies in existence. Alongside Bitcoin, Ether and Ripple are top three cryptocurrencies in the world and comprise more than 50% of the total cryptocurrency share.
If you want to go deeper into the technology of cryptocurrency, why not take a read of the paper (written by the mysterious Satoshi Nakamoto) that first introduced Bitcoin to the world? It’s some pretty highbrow stuff.
How Do Cryptocurrencies Work?
In very basic, top level words, here’s how cryptocurrencies work:
- An individual creates a digital wallet, which they can use to store digital currencies they obtain online.
- A shared public ledger connects all wallets online, so they can easily calculate their balance and verify transactions.
- Each transaction made has a secret key assigned to it by the bitcoin wallet, so a record of the transaction exists on the shared public ledger. Secret keys are only used once, so a new key is created for every transaction.
- Cryptocurrencies can be used to buy a broad variety of products and services, both on and off line.
You can see exactly how Bitcoin works on the official website.
The (Unofficial) Cryptocurrency Dictionary
Before you jump in the deep end, it’s vital to understand key cryptocurrency terms and processes. Here’s a quick list of terminology you need to know:
A block chain is a shared public ledger that the cryptocurrency network exists on. All transactions conducted are included in the block chain. This means that all wallets can calculate their balance and verify transactions.
A private key is a secret piece of data associated with a cryptocurrency transaction. It is used as a signature on a transaction and provides proof that the transaction has come from a particular wallet. Secret keys can only be used once, and so a new key is created for every transaction.
Mining is a block chain system that confirms pending transactions. To be confirmed, transactions must be in a block that fits very strict cryptographic rules. Mining also stops new blocks being added consecutively in the block chain. This way, it is not possible to control what is included in the block chain or replace parts to roll back past expenditure.
The proof-of-work scheme is the first timestamping scheme to be invented to deter tampering to the block chain. A hash (a long string of numbers) is associate with each piece of data in the block chain. If the data is changed at all, a completely unrecognisable hash will be created, and will be picked up by users as incorrect.
The proof-of-stake scheme is used by some cryptocurrencies to secure their network and achieve distributed consensus. Users are requested to show ownership of a certain amount of currency.
I Want Cryptocurrency, How Do I Get Involved?
It’s not just businesses who are adding cryptocurrencies to their wallets. British singer-songwriter, Lily Allen, has been kicking herself since 2014 for turning down a gig paid in a lot of bitcoins. And you can join in too.
According to Coin ATM Radar, there are currently 1,444 bitcoin ATMS in 56 countries, 79 of which are in the UK. What may come as a surprise to you is that it is possible to “withdraw” cryptocurrencies in your local Londis or barbers!
So, if you want to join the cryptocurrency world on a personal level, locate your nearest ATM and turn your GBP into digital cash. It’s worth noting that one bitcoin is currently worth £3,235.26.
You can set up your bitcoin wallet by following these steps.
Britain and Bitcoin
A concern about using cryptocurrencies in business is that it’s not recognised as a legal currency across the globe yet. The good news is that the UK has registered it as a form of currency, alongside five other countries. And many others are coming onboard.
So what role are cryptocurrencies playing in the UK? As well as registering it as a form of currency, the government is already exploring how to approach and incorporate the new digital currencies. A lot of UK business are already trading, buying and selling in cryptocurrencies, both online and on the high street.
You can find businesses in the UK, as well as across the world, who accept bitcoin payments here.
Businesses You Need to Know
So, as a recruitment agency, how can you join the world of cryptocurrencies? We’ve pulled together a list of growing cryptocurrency businesses: