What if I told you that you could pay for things on the Internet in cash, without entering your credit card details — effectively making credit card fraud a non-issue — would you do it? It turns out you can , more or less. We actually have the technology to pay in a cash-like manner over the Internet, and we can start using it right now. With this, there would be no way for anyone to get your money if a website you’re using is hacked.
What am I talking about? Bitcoin. Often associated with criminals, either hackers or drugs, this may be an important piece in a more secure future on the Internet.
With traditional online payments, we enter our credit card details on a website, trusting them to keep it safe, and to withdraw the correct amount from your account. Unfortunately, it can be difficult to know how the information you enter is stored and kept safe. Although there have been advances in this area, it can be difficult for the average person to know what to look for — and even so, it seems as if we read about new hacks and data breaches every week.
As I’m writing this, the Equifax data breach which may have exposed personal information of the Social Security numbers, birthdays, addresses, driver’s licenses and phone numbers of 143 million consumers, is only a few days old. It is a tragedy that this keeps happening. One of the largest data breaches ever, was when Target — the second-largest discount store retailer in the United States — was hacked, and 40 million credit and debit cards were compromised.
The lesson here should be that if you don’t feel safe using your credit card online, you shouldn’t. And if you do feel safe, maybe it’s time to start worrying.
With Bitcoin, you decide yourself when to send money to a website. There is also no way anyone can withdraw without your approval. How? Like the wallet with cash you might keep in your pocket or purse, you control access the Bitcoin wallet yourself; by using an app on your phone, your computer, or even a separate device known as a hardware wallet.
Your Bitcoin wallet is only as secure as you make it, but you control it personally, and it has the potential to be more secure than trusting your credit card details to some unknown website that you have no idea how handles it. There is still risk, but
To pay for something, you enter an address to send the money to, or — more likely — scan a code. After confirming the payment, the money is sent to the recipient and the transaction is stored in a permanent ledger that cannot be modified.
Sounds simple? Well, it is! And on top of that it’s very secure. Really, it is. Trust me. What, you’re not so sure you trust me? Well, considering that it seems like everything can be hacked, I don’t blame you; and this is one of the challenges to mainstream adoption. I could explain you the basic concepts, but it would take some time. If you are familiar with software development, I can highly recommend you learn more about it — the concepts are not that hard to understand. For this to be more widely used, it is essential that people trust it and it would help if more people know how it works.
In addition to making credit card fraud a non-issue, there are also other benefits of using Bitcoin ; it is very simple to use, both for customers and merchants, and you can send to anyone in the world that has a Bitcoin wallet without going through a bank.
There are some challenges to mainstream adoption and wide-spread use — after all, it’s a new way of paying and thinking about money, and there are some technological challenges too —but you can start using it today. Also, there are other currencies similar to Bitcoin, so what ends up going mainstream might be something else, but the underlying concepts would be the same.
So if it is so fantastic, why are we not using it right now? For one, it is often associated with criminals — and it is true that they have been one of the early adopters, even though it is actually much easier to track than cash. Second, it has been a little difficult to get hold of, since banks and financial institutions have mostly been against it — it is digital money after all, which has long been their domain. With Bitcoin, we take them out of the equation; you don’t have to keep your money in your bank account, and you no longer have to rely on VISA or Mastercard for purchasing anything.
Bitcoin is not without its controversies and challenges, but if we can overcome these things and make it more widely used, it has the potential not only to make our experiences on the Internet a lot safer.