OK, so that’s a fantastic explanation of how Bitcoin works, but what of the practical application in ecommerce?
A number of ecommerce sites are rolling out Bitcoin as a payment option. Ignoring the validity of Bitcoin as a widely usable currency at this time, there are appealing benefits. From a retailer’s perspective, Bitcoin’s lower transaction fees (1-2%) and protection against any type of reversal or chargeback makes it attractive. BTC payment clears instantly unlike PayPal, a benefit for both business and customer. Bitcoin also opens up business to customers in countries unsupported by PayPal and other credit issuers.
Ultimately the showstopper for many retailers could lie in the prevention of fraud. Bitcoin transactions are designed to be anonymous and untraceable which would leave merchants exposed.
For now it seems Bitcoin will be the preserve of the technically savvy until it proves itself as a regulated, secure and stable currency.