Office Document Strategies Blog

Bitcoins And IT Impacts

Posted by Lee Kirkby on Wed, Jun 8, 2016 @ 07:06 AM

Wouldn't it be nice to have the ability to create money?  Well in essence that is what happened back in 2008 when Bitcoins were invented.  

Satoshi Nakamoto is the name used by the inventor (or inventors perhaps) who created this online virtual currency.  For more of the story behind this event follow the link to the Wikipedia reference which outlines it in some detail.  

Altcoins_symbols_Bitcoins.jpg

Essentially what was created was means for people to use a software tool and some pretty potent hardware to 'mine' data and for a certain amount of mining a bitcoin is created.  These electronic coins could then be exchanged for goods and services provided by others who agree to accept them as currency.  According to the Wikipedia reference Nakamoto holds bitcoins which now have a value of about $538 million (May 2016).

At a value of approximately $500 each a bitcoin becomes a fairly valuable commodity and having some under your control certainly could mean you have significant spending power.

The challenge is to find people or organizations who are willing to trade in bitcoins.  Some financial institutions are starting to look a the product and we may eventually see them as an exchangeable currency.

If you have some bitcoins then there are some places you can spend them, including Expedia according to a recent article.  There are certainly others beyond the list shown there.

So what does a company do if it decides it might wish to deal in bitcoins.  First I would suggest do some serious research and learn as much as you can.  One of the real challenges often referenced is that bitcoins have been used for money laundering and other illegal acts and certainly this is not something that you want legitimate customers and authorities to be checking you for, just because you decide to deal in bitcoins.

A recent IT World Canada article describes the security of bitcoins as being a little like cash.  If you lose it is gone.  There is no means to recover it.  Losing the record of your bitcoins from your computer is like losing a bundle of cash.  

Where it is also a bit unlike cash is that currencies are backed by some authority, usually a government which guarantees the value of a note.  Bitcoins are backed by the originating system and the exchange process which transfers the value from one holder to another.  It is the tracking process which provides security and this is something which is quite different from other financial transactions.

Entering into this area of online commerce holds some challenges for the IT department according to the author of this article and understanding the implications of dealing before adopting the process is critical.

Bitcoins like so many other technologically driven innovations are potentially changing components of the commercial interface and like all such changes require sober thought and understanding before diving in.  Potentially, their use could open new or less competitive opportunities for some businesses, however a full understanding of how they work and the risks they hold is also a key part of an adoption decision.

Lee K

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Photo credit: By Helperdz (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

Topics: data security, it, bitcoin