Bitcoin. The world’s most famous cryptocurrency, or digital currency, whichever term you prefer. For those who may not know why it has been in the news so much lately, the value of Bitcoin has had a near vertical rise in recent months, prompting valid concerns of a rather large bubble:

Credit: Markets Insider

For clarity, this is what Bitcoin actually is:

A type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.

If you own just two full Bitcoins in your digital wallet, you have quite a few quid (or Dollars depending on your preference) to your name. Great you might think. But, that chart is about as perfect as it gets when it comes to demonstrating bubble territory. This makes it a currency that is volatile.

Stay well away

The business world out there at the moment is considering whether to start taking payment for products and services in Bitcoins. In order to do so, you need to set up an electronic payment system capable of accepting payments of Bitcoin in cash form. As far as I can tell, you cannot swap Bitcoins for Bitcoins as form of payment.

That is why the value of Bitcoin is measured against established currencies like the Dollar, Sterling, Euro, Swiss Franc etc. It’s the only way to be able to put a tangible, real-world value against the electronic coins, and it’s those values that have been soaring in recent weeks.

But, as I said above, we’re well into bubble territory here, and for anyone thinking of getting involved in Bitcoin at this present time, my own advice would be to stay well away.

For window and door installers, I would also advice the same. Bitcoin is far too volatile and unreliable. Swings in value up and down of 10% or more are regular. People can earn a ton extra and lose a ton in a matter of minutes. There is nothing substantial underpinning the infrastructure.

The real risk for window companies though is if they decide to start taking payment via Bitcoin.

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Inability to pay

Bitcoin really shouldn’t be classed as a currency, more a commodity, like Gold. In fact it has far more in common with Gold than it does with Dollars or Sterling. Yet, some are implementing the ability to allow people to pay for things via Bitcoin. It seems odd to me. You wouldn’t pay for things in Gold or Silver.

I would raise an eyebrow at any window installer that decided to start taking payment for their products and services via Bitcoin. The risks are just way too high.

This is my worry; a home owner has sunk a considerable amount of their hard earned cash into Bitcoin, hoping to increase their money pot, and things are going well for them at the minute. That good fortune allows them to feel safe, and decides to commit to projects such as home improvements, in this scenario, windows and doors. Their plan is to cash out their Bitcoins and use their increases cash pot to pay for such things. Then the worst happens. The bubble pops, or Bitcoin has a major correction and suddenly what Bitcoin value they had to be able to pay for things has evaporated in a matter of minutes. Meanwhile, the window company is left potentially with products that are made but cannot be paid for.

It sounds far fetched, but we’re fast zooming towards a society where digital currencies are going to become a mainstay. It is feasible to think that in just a few years there could be a proportion of window companies prepared to accept Bitcoin or other versions as payment. But it’s so unreliable. A home owner might have £20,000 to their name in the form of two Bitcoins and might at that present moment be able to pay for a house full of windows and doors. Overnight though, it could all go horribly wrong, it could drop by tens of percent in minutes and suddenly they don’t have the available funds to be able to pay for what they signed up for. Disaster for both parties.

And the risks don’t stop there. Say window companies build up a store of Bitcoins as payment for their products and services, that’s fine. It’s still likely that they have to pay their own suppliers in pounds and pence, so they dip into Bitcoin wallets and traditional accounts to settle up bills. But again, what if the Bitcoin bubble decides to dramatically burst, or there is at least a major correction which wipes out a large amount of value of the coins? Where is the window installer going to find the cash to be able to pay their bills? Why risk it?

For me there are still way too many reasons to start enshrining commercial transactions through cryptocurrency systems. Not to mention that a lot of rumoured criminal cash is funnelled through digital currency systems. I think in 2018 we will start to see very heavy regulation of digital currencies by Governments around the world, which will send the price of online coins plummeting. The need for regulation, and to find the criminals hiding in the system will make this happen.

My advice is to stick to good old fashioned money. Tried and tested.

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