Bitcoin: The New Travel Movement?
Is the future of paying for travel here already?
Bitcoin, the virtual currency, is now slowly becoming an option when paying for a number of travel related things and we here at Sundance Vacations wanted to take a closer look.
What is a “Bitcoin” you might ask? Well, Bitcoin is a cryptocurrency that allows people to pay for things virtually, without ever actually having to use a check, cash or a credit card.
Created in 2009 by Satoshi Nakamoto, an anonymous person whose identity is still unknown, this virtual currency allows the user to have access to it anywhere in the world, provided they have access to a computer. Introduced as an open-source software program, which essentially means it’s free for anyone to use, Bitcoin is Peer-to-Peer (P2P). It allows for a seamless transition of money between users without having to deal with banks or third party lenders.
Now I’m sure you probably have about a million other questions pertaining to Bitcoin, I did too, at first.
Questions like: Who keeps track of how much you have? Couldn’t you just say you have a trillion? Who accepts this as a payment? And frankly the two most important questions of: How do I turn it into REAL money? And, is it a safe and secure investment for me?
According to the Bitcoin website, the computer program or application, runs like a normal piece of software to front end users. On the back-end however, Bitcoin relies on what they call a “Block Chain” which is a record of all the transactions in the world.
“The block chain is a shared public ledger on which the entire Bitcoin network relies. All confirmed transactions are included in the block chain. This way, Bitcoin wallets can calculate their spendable balance and new transactions can be verified to be spending bitcoins that are actually owned by the spender. The integrity and the chronological order of the block chain are enforced with cryptography.”
This Block Chain is what determines how many Bitcoins a person has, who traded with who and the demand of the currency. Similar to how a bank would monitor their funds. People can earn Bitcoins by through a process called mining, which is helping the Block Chain process transactions, or they can be purchased for a flat rate of cash similar to how you would buy gold or silver. To read more about Bitcoin, check out the frequently asked questions (FAQ) section in their website here: “Bitcoin FAQs”
As far as the question of who accepts Bitcoins as a form of payment, well, that answer is ever expanding, especially in the Travel industry.
Midway through 2014, Expedia.com started accepting payments in the form of Bitcoins. This was a tremendous step in the right direction for Bitcoin becoming a more valid form of currency. Expedia joined a number of other companies that are now accepting these virtual payments. Overstock.com, an online shopping outlet, also accepts Bitcoin, just to name another.
You can now book hotels, flights, rental cars and all the other services that Expedia offers and pay with it via Bitcoins. These companies still need a third party to convert coins into real cash, so Expedia and many others have turned to Coinbase.com to do just that.
Other websites like CheapAir.com, similar to Expedia, are allowing people to use Bitcoin on Amtrak train travel. GlobalHotelCard.com, which is powered by Orbitz, is also accepting Bitcoins and allows its users to buy a card that can be redeemed for hotel reservations all over the world.
You may be wondering why businesses would be so interested in accepting this form of payment when it seems like it could be a large hassle for people who don’t regularly use it. That answer is easy. It’s way cheaper than other forms of payment. When credit card companies are taking roughly 2%-3% of a transaction from the business, Bitcoin transaction fees range from very little to non-existent. This allows the buyer to get a cheaper price and the company receiving the payment to save money on the transaction itself.
Reading through a number of articles for Sundance Vacations on this topic one thing seems to be very important when it comes to Bitcoin being associated with traveling. This currency is not linked with any banks or institutions and can be accessed anywhere in the world, thus it makes it extremely convenient when you are traveling overseas or far away from your local banks. You wouldn’t have to worry about exchange rates either.
Although Bitcoin is currently the longest running and active form of cryptocurrency, there are still risks associated with it. Again according to their website, Bitcoin says that you should always assume there is a risk associated with any currency.
“History is littered with currencies that failed and are no longer used, such as the German Mark during the Weimar Republic and, more recently, the Zimbabwean dollar. Although previous currency failures were typically due to hyperinflation of a kind that Bitcoin makes impossible, there is always potential for technical failures, competing currencies, political issues and so on. As a basic rule of thumb, no currency should be considered absolutely safe from failures or hard times. Bitcoin has proven reliable for years since its inception and there is a lot of potential for Bitcoin to continue to grow. However, no one is in a position to predict what the future will be for Bitcoin.”
Other issues that could come about from this is that a number of government agencies are taking a look into the virtual money because of its unregulated nature. Since it is not run by a bank or any government, there are no taxes on Peer to Peer (P2P) transactions, which runs into tax evasion issues. Furthermore, it seems that a number of government agencies think that criminals and other unsavory characters are using it to avoid being traced to their nefarious deeds.
Is the system perfect? No, not yet. Is it convenient? Yes, but there are risks.
It is interesting to see so many large companies backing this form of payment, which I would say bodes well for it, however if the government gets involved, that could shake things up completely. The future of the Bitcoin is yet to be determined, but if it allows us to have a more convenient way to pay for things while we travel and allows us access to cheaper prices, the risk may be worth the reward. The new sharing economy has changed the way we are doing business, Bitcoin is only one of the many new things in a long list of ways that traditional business is being threatened.
So, is Bitcoin the future of paying for travel? Only time will tell.
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