Bitcoins, Altcoins and Software Development

We’ve been following Bitcoin’s (and Altcoins) for a while now and with them currently hitting mainstream news as an almost weekly occurrence we thought we would give some of our own thoughts on these technologies.

Bitcoins are a peer to peer payment system and payment currency that date back to 2009. They are known as a cryptocurrency and are created by a process known as mining, whereby miners use computational power to confirm the validity of transactions within the currency. Since the creation of the Bitcoin system, hundreds of other cryptocurrencies have emerged. It is widely agreed that Litecoin’s are the second biggest cryptocurrency with Peercoin holding third. These alternate cryptocurrencies, or Altcoins, vary primarily based on the number of coins that will be available and also on the mining algorithms used.

With the value of Bitcoin as of today around $678 (or £406) this gives the market a total value of around $10 billion. Unsurprisingly a huge service industry is well into its infancy as a result. There are exchanges, shops, ATM’s, stock markets, gaming sites and many many other services all using and accepting Bitcoins as a method of payment. There are also a surprising number that now accept Altcoins, such as Dogecoin. As a result we’ve already started to have the odd question from our clients about software development in this area. One area of growing interest is the very idea of accepting Bitcoins as payment.

The major concern with regard to using Bitcoins as payment is currently the volatile nature of the Bitcoin market. If you setup a server to handle everything yourself we agree this would be a valid concern, by the time you were ready to turn the Bitcoins into a ‘real world currency’ the market could see a drop, hitting your profits. In our search for a solution we saw a number of possible candidates, but the current standout for us was Coinbase. They provide developer resources to easily accept and handle Bitcoin payments. The real headline of their services, however, is that they automatically adjust your site’s Bitcoin price based on market movements. When a user makes a payment, they instantly transfer it to your local currency to eliminate all exchange risk. Given this low risk solution has no risk of chargebacks and little to no fees compared to the 2-3% on credit cards, we can see why many businesses are tempted. We would love to discuss any ideas for Bitcoin software development and your business.