Bitcoin – My thoughts

A while ago a friend suggested I looked into the use of Bitcoin in the adult industry and what possible future applications there could be using this technology.

It’s apparent there is a history of Bitcoin being used by entertainment providers in some niche markets to secure deposits or final payment for services rendered. Okay I thought, let’s look into this more deeply. For those who don’t know Bitcoin is an alternative virtual currency that isn’t backed by any country, bank or commodity. It floats freely on the market being bought and sold. As a result it’s value wildly changes meaning it is always smart to cash it out quickly if you ever get some.

One of the issues I found with Bitcoin was that hardly anyone understands how to use it. It’s not like a PayPal experience where money is kept online instead it’s kept offline on an electronic device like a Pc, tablet or phone – items that can be more easily stolen or break down meaning that you could lose your money – that as a concept I don’t feel comfortable with and certainly in my eyes isn’t very secure.

I looked into using Bitcoin in a similar way to PayPal, keeping coins in a virtual wallet as opposed to on outside vulnerable systems and contacted two gateway companies BitPay and CryptoPay. The former is an American company that complies with Federal laws who primary currency is US dollars. CryptoPay on the other hand seems to be a UK company that is entirely employed by Russians and also aren’t US federal compliant. CryptoPay cannot be used for any customers in the US which is a major disadvantage.

BitPay I thought was very well organised and professional. To get an account for example you have to supply ID documents. Thus your transactions can be traced to an individual which is actually important in the real world of online trading. BitPay has gone to a lot trouble making their Web site easy to understand and provide widgets for adding a BitPay button to a website in the same way as PayPal does.

I had the thought that Bitcoin could be used as an age verification tool for websites since you have to be over 18 to have a virtual wallet. I asked CryptoPay this question and how they check the age of a user and their basic answer was the card distributors do that and not them. I pressed them further how they do that and they just said “I’m not going to tell you that” which I felt was an unprofessional response. I can only assume in reality they don’t age check anyone and just say so; thus they cannot be used to build an age verification application.

I had I mixed experience researching this article; BitPay being friendly, approachable and obviously a corporate animal to dealing with CryptoPay who I felt I was chatting to a secret society with the customer service skills of an angry elephant in a restaurant that just found there are no more free peanuts. I know which company I would deal with. With such mixed experience I am not surprised Bitcoin hasn’t taken off yet in the way everyone predicted. Further transparency is greatly needed and training when dealing with people actually asking questions.

From a business point of view BitPay seems to be the only player in the market that I would integrate into any store despite the increased rates of 3% for transactions outside the United States which is an awful shame but it is what it is.