NEW YORK (MainStreet)So what's wrong with actual U.S. dollars? Meet the twenty=first-century cool currency, Bitcoin - the virtual, peer-to-peer currency that operates without the backing of any nation state and which is making a run at becoming the hipster currency du jour.
"Bitcoin is the online equivalent of a bag of cash," said Kevin McIntyre, an economics professor at McDaniel College in Maryland. Two distinctive facts about Bitcoin: anonymity is baked into the system ("it's almost impossible to match up a person with a transaction," said McIntyre) and almost all transactions are irreversible. That latter fact appeals to merchants - who are pestered by "chargebacks" when credit card companies void a transaction and leave the merchant out of the money.
A third fact: Bitcoin transactions involve negligible transaction fees, typically under 1%, compared to over 3% for most credit card transactions.
Do the math. There is definite appeal of Bitcoin to merchants.
"We like Bitcoin a lot, especially for international orders," said Alex English, a partner in ProtoParadigm, an online retailer that sells supplies for 3D printers. "We know we would have chargebacks and that is peace of mind."
It has since slid down to under $100.
What spawned Bitcoin in the first place, though, has been distrust in traditional currencies, said Jacqui Dunne, who authored Rethinking Money: How New Currencies Turn Scarcity Into Prosperity (Berrett-Koehler, 2013). She added that people who have been burned in the banking crisis of the last decade - or the economic turmoil in countries like Greece and Spain - "are asking what else can we do?" For some, she suggested, Bitcoin, with its lack of government ties, looms large.