Digital currency is here to stay…but just what defines “digital currency?”
Wikipedia defines digital currency as “…a form of virtual currency or medium or exchange that is electronically created and stored. Some digital currencies are crypto currencies, for example bitcoin.”
Just this week, an article in CNNMoney reported that “Bitcoin enthusiasts may soon be able to use the digital currency to support political campaigns.” The Federal Election Commission (FEC) had been set to rule on the use of bitcoin to support political campaigns on Wednesday, however, the FEC delayed their decision. Citing concerns regarding bitcoin’s anonymity, FEC Commissioner Ellen Weintraub pushed back a ruling until the FEC’s next open meeting.
Although bitcoin may be viewed as the digital currency of the Internet, the IRS considers it a commodity rather than a form of currency. We can’t hold it in our hands or use it to fill up our cars with gas or walk into a convenience store to purchase a drink.
If the bitcoin wallet company Xapo has its way, however, all of that is about to change. This week, Xapo announced that “it is two months away from introducing the first debit card that will let you spend your bitcoins at any place that takes Visa or MasterCard.” A huge step forward and a sign of bitcoin’s growing popularity.
Bitcoin users today need to scan a QR code with their phone or email a lengthy bitcoin address to a seller in order to purchase items. It’s easier to swipe a credit or debit card and be done with the transaction. But Xapo hopes to change all that by linking online bitcoin wallets to their new debit card.
In addition, Xapo is “in the process of becoming a debit card issuer on one of the major credit card networks.” What this means is that Xapo will be able to issue individual debit card numbers as well as expiration dates for free. If you want an actual card for purchasing routine items such as gas or groceries, Xapo will be able to issue a plastic card for $15.
And just like a “real” debit card, when the Xapo debit card is used, the “…number checks in with Xapo, which approves or declines the transaction, depending on how much bitcoin you have in your wallet. It then sells the bitcoin on the Bitstamp Exchange and pays out the merchants just like any other card issuer.”
If you’re interested in signing up for the card or finding out more information, check out Xapo’s website at https://xapo.com/#home.
But even as bitcoin continues to gain in popularity, a group of experts told CNBC this week “the world already has a digital currency…the U.S. dollar.” Many of those experts argue “…that the USD possesses many of the strengths associated with bitcoin.”
One expert, ConvergEx’s Chief Market Strategist Nicholas Colas, said “The $100 bill is the world’s bitcoin. It’s anonymous. It’s easy to use. It’s actually easier than bitcoin because you don’t need a computer of even power.”
And Christopher Vecchio, a currency analyst for the DailyFX, believes that for many merchants, “…money is already digital.”
“The bank isn’t holding a lot of money in there. The money in your account is data. It’s a set of zeroes and ones.”
Vecchio believes “…bitcoin’s role in reducing transaction costs is noteworthy, but this shift is part of a broader evolution in use of money worldwide. The future of money will really be on finding ways to transact in a lower-cost way, and that’s a societal trend, not just bitcoin.”
Link to article on network: http://www1.gcnlive.com/CMS/index.php/component/k2/504-digital-currency
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