Late last year, a radical banking experiment hit a major milestone in Europe, a continent with no shortage of financial drama. It had nothing to do with the euro, however, and everything to do with the “currency of the future”: Bitcoin.
The digital currency, still widely dismissed by many as Internet play money, gained an unprecedented foothold in the traditional banking world. In December, a Bitcoin currency exchange in France became the first to officially operate within the European financial system. Bitcoin-Central, and its parent company, Paymium, will offer their Bitcoin customers a legitimate French payment account through a partnership with the French financial firm Aqoba. Users will be able to buy euro-priced goods with a debit card attached to that account, and even have their salary paid into it. The account can then be used to buy Bitcoin-priced products online through Bitcoin-Central and, alternatively, trade in Bitcoins for euros. (One Bitcoin is currently worth around $13.) “Ever since we started Paymium, what we’re trying to do is explain the benefits of the technology to the banking industry,” says Paymium co-founder and CEO Pierre Noizat.
Banks and governments may be slow in listening, but there has been a dramatic growth in the number of Bitcoin users and retailers. WordPress, the ubiquitous blogging website, now accepts payment in Bitcoin. Bitcoin transactions in 2012 expanded to almost five million through September, more than double the number of transactions for all of 2011 and up from just 219 in 2009. It is now used to buy everything from cupcakes in San Francisco to limo rides in New York.
Bitcoin’s big advantage is that it is essentially the cold, hard cash of the Internet. Instead of bills, Bitcoin’s software keeps a public ledger of every transaction among users. If a buyer and seller are running the software on their computers, they can directly exchange Bitcoins, anonymously and with no taxes or bank fees. Others can pay a company to process the payment. Bitcoin accounts are listed simply as a string of letters and numbers with no names attached, giving a level of anonymity impossible with debit and credit cards or even PayPal accounts.