Computers and InternetFinancial Planning

A practical approach to bitcoin for regular people

Today I set up an account on Coinbase so that I can conduct transactions in bitcoin. If you don’t know what either of those terms means, there is probably no point in continuing to read further. But if you are aware of bitcoin and might have been wondering whether “regular people” should be involved, this post might be useful. I got involved for two reasons. First and foremost, my involvement in leading edge technology has been an important part of my career and so this move in in step with my modus operanti. Second, I’ve been frustrated with the costs of using traditional payment systems (Visa, MasterCard, Amex)for my small businesses and recently started adding a 4% surcharge to defray part of the cost of electronic payment systems as allowed under NJ law). But I also want to provide customers with a lower cost option to make electronic payments and avoid this charge.

Will I use it?

I don’t really expect any customers to pay with bitcoin anytime soon. I just want to have it available and ready when they are. I will use bitcoin to purchase a product when the opportunity may arise. This will be more out of curiosity and novelty than anything else. I’ll probably keep a balance of less than $100 dollar value in my Bitcoin account. (That translates to less than one bitcoin).

Is it safe?

We are told it is safer than traditional U.S. electronic payments. That’s all a consumer really knows.

Is the currency stable?

No, IMO. Think of it like buying a share of stock. The price will fluctuate.

What is involved to get started?

Be prepared to give Coinbase.com a good bit of your personal information in order to open and verify the account. Other people have commented on the extent of data they need to reveal just to open an account. The belief that Bitcoin is an anonymous currency simply is not true if you are dealing with Coinbase. Setup involves two step authentication with your regular bank so your account may not be ready to operate until the next day.

Why Coinbase?

There is no compelling reason to choose Coinbase over other digital wallets. We read that they are the leaders in bringing this new technology to the public. Coinbase is a digital wallet that acts as a clearinghouse or as a sort of banker in the transactions.

What can I buy with bitcoin?

If you live and conduct in-person transactions outside of the techy neighborhoods of California, apparently not much yet. But that will likely change over time. There is a growing list of online merchants who accept bitcoin but I haven’t dealt with any of them yet.

 

So if you are like me, curious and with too much time on your hands and a few bills to gamble away, go ahead and take the plunge. Opening a bitcoin account will be an educational experience and will give you an addition quiver in your cocktail party conversation topics.

One thought on “A practical approach to bitcoin for regular people

  1. My enthusiasm for Coinbase diminished after learning there is a 3.5% commission spread when buying bitcoin. Reminds me of the good old days when stockbrokers could charge commissions like this. I’ll likely wait it out until the transaction costs come down to something like what we see in other financial markets.

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