The Bitcoin Continues to Gain Credibility From Merchants and the Fed

By:  Bob Adelmann
11/27/2013
       
The Bitcoin Continues to Gain Credibility From Merchants and the Fed

The Bitcoin is no passing fancy but is gaining credibility daily as a better alternative to central banks' fiat currencies.

When Jeff Klee was asked by a client if his travel agency, CheapAir.com, would accept Bitcoins, he admitted he didn't even know what they were. He didn't know that thousands of merchants were already accepting them in payment for services and products, such as WordPress, OKCupid, and even Richard Branson’s Virgin Galactic on which Klee no doubt had already booked some of his clients.

Once he learned what they were, and found a digital “wallet” — Coinbase — to help him manage the transactions, he saw the marketing advantage: “We expect people to come to us especially because they can use Bitcoin.” Klee isn't taking much of a risk as more than 14,000 merchants already use Coinbase, which has opened up nearly half a million Bitcoin wallets for its customers. Said Klee: “If you have a lot of people accepting it, it becomes a useful and legitimate form of payment.”

That’s the ruling that Federal Judge Amos Mazzant made back in August when he said that “Bitcoin can be used as money. It can be used to purchase goods or services … it can also be exchanged for conventional currencies such as the U.S. dollar, Euro, Yen and Yuan.”

The Bitcoin gained some more credibility when the Senate Homeland Security and Governmental Affairs Committee invited six federal agencies to testify about it, along with numerous other interested parties. One of those “interested parties” was Federal Reserve Chairman Ben Bernanke, who sent the committee a letter expressing his view that such currencies as the Bitcoin “may hold long-term promise.” On that day the market value of the Bitcoin jumped $40 to $785. As of Tuesday, November 26, a Bitcoin was worth $840.

This was followed in short order by an article in the New York Times that asked rhetorically if the Bitcoin was just a passing fad, or if it had legs. The author found a skeptic who said that “In a matter of months you won’t be hearing about it. It will go the same way of Paris Hilton.”

Not if China has anything to say about it.

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