5 Ways to Participate in the Bitcoin Revolution
Bitcoin is the most successful digital currency to date. It is a new form of crypto-currency in which encryption techniques are used to control the creation of new bitcoins and to verify transactions.
Enthusiasts for bitcoin include Bill Gates, the founder and ex-CEO of Microsoft; Sir Richard Branson, founder of the Virgin Group; ex-US vice president Al Gore; and Eric Schmidt, former CEO of Google. "At our venture firm, we continue to see an escalating stream of fascinating new bitcoin uses, cases and applications from entrepreneurs," says legendary venture capitalist Marc Andreessen.
Here are five ways to participate in the biggest financial revolution of the century:
1. Acquire bitcoins.
There are three popular ways to acquire bitcoins. You can do it by accepting bitcoin payments, mining for bitcoins, or purchasing them on a bitcoin exchange.
A.) Accepting bitcoin payments: The easiest way to get into bitcoin as an entrepreneur is to start accepting bitcoin payments through a merchant solution. In 2015, there were more than 100,000 retailers that had already started to accept bitcoin payments through bitcoin payment processors such as Coinbase, BitPay and Coinify. These retailers now include high-profile businesses like Amazon, Tesla and Microsoft.
B.) Mining bitcoins: Mining bitcoins is like mining for gold, except that instead of mining in a physical geographic location, you mine bitcoins on the online bitcoin network. Your tools for bitcoin mining are not gold pans and buckets but a powerful computer and specialized software. You mine bitcoins by solving complex math puzzles. As of July 2016, miners compete for a reward of 25 bitcoins approximately every 10 minutes when they successfully solve a puzzle. The supply of new bitcoins will continue to drop by half every four years.
When bitcoin mining was still new, you could mine using an off-the-shelf computer. Now that there are a lot more people competing to mine, you need to spend more money for faster hardware. A cheaper alternative is to combine your computer power with other groups of bitcoin miners through mining pools like Slush's Pool. Bitcoins mined are divided among the group in line with what has been contributed to the pool.
C.) Purchasing bitcoins: You can purchase bitcoins using cash through a bitcoin exchange and then transfer the bitcoins to your bitcoin wallet. A bitcoin wallet is used to store your private keys which are matched to your bitcoin address as evidence of your ownership of the bitcoin.
You can also purchase bitcoins from individuals in your area on sites like localbitcoins.com.
2. Engage in services for bitcoin.
"The bitcoin world is this new ecosystem where it doesn't cost that much to start a new bitcoin company, it doesn't cost much to start owning bitcoin either, and it is a much more efficient way of moving money around the world," says Tim Draper, venture capitalist.
If you don't know where to start with bitcoin, take a look at some of the existing business ideas that have already succeeded within the bitcoin world:
A.) Digital or hardware wallet services: All owners of bitcoins need a secure place to store their bitcoins. At the moment, they store them in a digital or hardware wallet that is similar to a virtual bank account. The biggest threat to digital wallets are hackers. Hackers have been known to break into digital wallets. These bitcoins are not backed by any government or the Federal Reserve. Once stolen, owners have no way of getting back their bitcoins or have much recourse against the hackers. Online security for digital wallets will probably be extremely important for bitcoin's future.
To protect your bitcoins, you can use cold wallets. These are hardware wallets that aren't connected to the internet, which keeps them away from hackers.
B.) Bitcoin payment processors: Also known as bitcoin exchanges, there are multiple bitcoin payment processors that have received substantial funding from venture capitalists to create services to process payments on behalf of vendors. Large businesses like Amazon, Microsoft and Dell all use these services.
3. Provide solutions for bitcoin acceptance.
One of the biggest challenges that bitcoin faces for its survival is to find acceptance among non-users. Current bitcoin owners are invested in the success of bitcoin's future. If you can create a way to make bitcoin more widely understood and accepted by the public, you are onto a winner.
4. Leverage blockchain technology.
Blockchain is the technology that makes bitcoin digital currency possible. It is a public digital ledger of all executed bitcoin transactions.
For many financial institutions, the blockchain recording system holds promise as a secure, improved and transparent method to speed up transactions, cut costs and eliminate fraud. Because of this, some organizations, including financial institutions, are looking for ways to leverage blockchain technology for their own businesses.
This represents a huge opportunity for entrepreneurs to find new ways to leverage blockchain technology in order to create better systems and services for these organizations.
For example, the blockchain technology enables Bitwage, a payroll company, to process international payroll in minutes instead of days through the traditional banking system.
5. Invest in bitcoin.
One reason that bitcoin has been popular as an investment vehicle is because the numbers are limited. There are only a maximum of 21 million bitcoins to be mined. Currently, there are 15 million bitcoins in circulation; that is, 74 percent of bitcoins have already been mined. The limited amount of bitcoins available makes bitcoin an attractive investment tool for many, although the price of bitcoins has been highly volatile. For example, entrepreneurs have been able to profit by buying low when the bitcoin first came out and selling high when its price rose.
If you are a savvy investor, you may be able to find a way to profit from the changing price of bitcoin.
These are just five ways you can participate in the bitcoin revolution. They are not risk-free so make sure that you do your research, understand the technology, and perform due diligence before making your first move.
Entrepreneur Editors' Picks
This Co-Founder Was Kicked Out of Retailers for Pitching a 'Taboo' Beauty Product. Now, Her Multi-Million-Dollar Company Sells It for More Than $20 an Ounce.
Have You Ever Obsessed Over 'What If'? According to Scientists, You Don't Actually Know What Would Have Fixed Everything.
After He Was Fired From the UFC, This Former Fighter Turned His Passion Into a Thriving Business
Most People Don't Know These 2 Things Are Resume Red Flags. A Career Expert Reveals How to Work Around Them.