Bitcoin Makes a Connection with Mainstream Financial Services

In December, a French Bitcoin currency exchange became the first to operate within the European financial system. Bitcoin-Central, and parent company Paymium, partnered with French financial firm Aqoba to enable Bitcoin enthusiasts to open a Bitcoin-based payment account attached to a debit card. Account holders can be use Bitcoins to buy products online, at the point of sale with the card, or trade Bitcoins for their market value in Euros.

Bitcoin use is still limited, but growing quickly. More than five million transactions were settled using Bitcoins during the first nine months of 2012, more than twice as many as during the entire year of 2011.

The two primary benefits of Bitcoins are anonymity and a lack of fees, including interchange, currency exchange or taxes (as a result of the anonymity). From Maclean’s article:

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.

Because of this focus on anonymity, much of Bitcoin’s popularity has come from illicit activities such as illegal drug sales and gambling rings and explicit purchases such as adult entertainment. This new attachment to a legitimate financial system could potentially serve as a step towards legitimizing Bitcoins. But more likely, given the severely limited number of consumers willing to undergo the inconvenience of converting their national currency into digital coins, this will only serve to alienate the few supporters it currently has.

Click here to read more from Maclean’s.