Bitcoin is a kind of cryptocurrency that was developed in
2009. They aren’t sure who actually created it, but the mysterious person goes
by the alias ‘Satoshi Nakamota.’ Transactions used with bitcoin do not involve
middlemen. This means there are no banks or even the government involved during
any transaction. There also aren’t transaction fees and your real name is not
associated with anything you do. As bitcoin is growing and becoming more widely
accepted, more companies are accepting bitcoin as a currency and the services
and products offered increases. The reason cryptocurrencies were developed were
so users could purchase items and services over the internet anonymously. With
all the security threats out there, I can see why this benefit would attract
people. In the last couple of months, both my mom and dad had their credit card
information stolen. You never think it can happen to you, but it does occur
more often than we think.
Features and
Functionalities
Bitcoin is based on a public ledger system call the
blockchain. The blockchain authorizes transactions using cryptography or a
secure way of doing business over the internet. Users then use a private key to
access their virtual wallet and see things like their balance and
transactions. Bitcoin is peer-to-peer
and open, but still secure for people to do daily business. A beneficial
feature of bitcoin is that it isn’t tied to any country. This makes international
payments easy and inexpensive. Imagine not having to deal with exchange rates!
When you go through the transaction, the only thing linked to you is your
wallet ID. Bitcoins are stored in virtual wallets that are located in the cloud
or on a user’s computer. It is similar to Paypal because you can send and
receive bitcoins, pay for products and services, or just save them to see if
the price increases.
Some other functionalities of bitcoin are transfer of
property and identity management. With transfer of property, people who are
buying cars from someone else would not have to spend so much time with third
parties. Using bitcoins, a person could transfer the title over, and verify
accidents and inspections all over the blockchain. This can hold true for real
estate as well. When you take out the middlemen, things are easier for all
parties involved and convenience is critical. With identity management, people
wouldn’t have to carry a passport, which is easily stolen when you are carrying
it around. A person would just need to provide their bitcoin key to cross the
border. How cool is that? Overall, not having to be preapproved for bitcoins,
not having to deal with frozen accounts, the instantaneous nature of the
transaction, and no chargebacks, bitcoin is an attractive way to do business.
IVK and Bitcoin
If IVK invested in bitcoin, it could help them in different
ways in their financial institution. IVK could offer bitcoin as a new currency
to their customers. Acquiring new customers can be hard, but offering a new
currency can be a great way to attract new business. IVK could then offer
peer-to-peer lending with bitcoin. IVK could act as one ‘person’ and the
customer can be the other person so that there are no middlemen involved and
customers get a new option for loans. Offering more services that are
affordable to their borrowers is huge for making those customers who may be on
the edge when trying to choose a financial institution. Cryptocurrencies are on
the rise, so this new innovation can be a great growth opportunity for IVK.
Austin, R., Nolan, R., & O'Donnell, S.
(2009). The Adventures of an IT Leader. Boston: Harvard
Business School Publishing Corporation.
Bitcoin. (2014). Retrieved May 15, 2014,
from Bitcoin Open Source P2P: https://bitcoin.org/en/
Bitcoin’s Promise Goes Far Beyond Payments. (2014,
April 24). Retrieved May 15, 2014, from Harvard Business Review:
http://blogs.hbr.org/2014/04/bitcoins-promise-goes-far-beyond-payments/
Should
You Invest in Bitcoin? (2013, Nov 23). Retrieved May 15, 2014,
from The Wall Street Journal:
http://online.wsj.com/news/articles/SB10001424052702304607104579212101356897382
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