It happens all the time – a student swipes their ACT card and walks away with their new purchase. The process seems instantaneous, secure and foolproof. Most of the time, there’s no reason to doubt that, but a purchase like that can involve identity theft, refusal of access and fees.

Bitcoin, programmable money that can be spent in a number of places, is a low-cost, high-speed way of payment – and recent growth has sparked discussion and scrutiny into previously under-the-radar “crypto-currency.”

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David Bailey, University of Alabama alumnus and founder of Forza Financial, founded a quarterly magazine, yBitcoin, to educate people about bitcoin. He said the bitcoin model, with all the traditional properties of money, has the potential to revolutionize commerce and government around the world.

“Bitcoin is going to do [to] the financial world the same that the Internet did to what we communicate,” he said.

Bailey also points to the Internet as a comparison when it comes to the controversy that often trails bitcoin. Concerns over its use in illegal activity have kicked up debate over its regulation and use – a problem that Bailey said also dogged the developing Internet.

“The controversy basically spins out of the fact that, for a long time, bitcoin was seen as basically nothing. It was just pieces of code – ones and zeros. People were just kind of moving ones and zeros around. From that standpoint, bitcoin, for a long time, was kind of like this thing for crypto-anarchists, cyber-nerds and hackers,” he said. “But the principles and properties of bitcoin are extremely valuable. Most of the controversy you hear about now stems from bitcoin’s early days.”

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Crypto-currencies, which are math-based, stand in stark contrast to fiat money, the current system, which gains its value from the backing of governments. Benton Gup, UA professor of finance, said past systems have included the trade of commodities and the backing of currencies using commodities.

He said there is no doubt that bitcoin is well-designed, but he sees no reason to use bitcoin over an established currency. In fact, Gup said bitcoin’s ties to the black market result from one of its two most limiting characteristics.

“One of the strengths of bitcoin is the anonymity of the user,” he said. “That’s also one of the weaknesses from a legal point of view.”

That anonymity, Gup points out, has led to a minor exodus of companies, some as large as Apple, and countries such as China from bitcoin’s stable.

“Bitcoin can be used for illegal purposes … and because of that, the people that transmit that information, like Apple, may be subject to certain laws because they’re supposed to know what’s going on on their systems,” he said. “I don’t see how they can overcome that issue [of anonymity].”

Bitcoin’s other fatal flaw, Gup said, is its price volatility.

“You’re investing in, in essence, in a commodity whose value can go up and has been going down,” he said. “It doesn’t have constant value.”

And while that is true of much in finance, Gup said bitcoin’s fluctuations couldn’t be projected with any certainty. Ultimately, he said, bitcoin is being used legitimately and effective across the world, but it is held back by its own strengths.

Bitcoin does not point so much as the future of money as it does reflect an existing trend – digitalization.

“Money is whatever people are willing to accept in the broad sense of the word. At one point in time, sheep and cattle were money. The concept of what we are using as money is changing,” Gup said. “Quite clearly, digitalization is influencing the way we make our payments and bitcoin is a contribution in that area.”

Bailey also sees progress over time reflected in bitcoin, but said he sees bitcoin as the leader of a movement that resolves current issues in fees, accessibility and security.

“Fiat currencies come and go all the time and generally they have a pretty short time life span. A lot of people are looking for a viable alternative that you can actually use online,” he said. “Bitcoin enables the 6 billion who don’t have a bank account … now you can be this global actor in this global commerce in this global community.”

Bitcoin, Bailey said, is actually more secure and beneficial for buyers and sellers alike – as a business owner, he prefers bitcoin to other methods of payment. Other businesses that have jumped on board include Overstock and Virgin Galactic. Current price volatility, he said, is a byproduct of bitcoin’s youth.

“The price of bitcoin will stabilize in time,” he said. “Bitcoin works around functions and marketplaces. You have buyers and sellers. The price of bitcoin represents the sentiments of those buyers and sellers. There are times in which people overvalue what bitcoin is worth at the moment. It was called a bubble earlier this year – it was called a bubble in 2011, when it hit $30. In my opinion, I think there are times that bitcoin becomes overvalued for its current utility and I think there are times that it’s undervalued for its current utility. I do think the price of bitcoin is very volatile but you also have to remember this is really early days for bitcoin.”

He projects increasingly higher values for bitcoin and says a crypto-currency, whether it is bitcoin or its successor, will change everything.

“Students needs to be paying attention because it’s going to change how they do business, it’s going to affect how they get paid, it’s going to affect how governments function,” he said.

Bailey said students and faculty have joined him in considering bitcoin as at least a worthwhile investment.

Graham Byrd, a junior majoring in mathematics who is on the STEM path to the MBA, said he was initially perplexed by bitcoin.

“Getting educated about bitcoin is surprisingly easy. The information is abundant and accessible. However, the technical details of crypto-currency are certainly not the easiest concept to grasp,” he said. “Also, it is easy to find information about bitcoin that is biased in many different directions. It was difficult to find a balance of opinions, but I was able to do so through keeping the sources of my information broad.”

He considers bitcoin a “high-priority investment and asset” and sees a bright future.

“As more companies and governments continue to support and endorse bitcoin, I think it is poised to become a prominent and efficient way to support the infrastructure of commerce on a global scale,” he said.

Bailey said bitcoin’s best qualities – its immediacy, decentralization and accessibility – and healthy growth make him optimistic about its future value and impact.

“The state of bitcoin right now is [that] bitcoin has never been better,” he said. “We haven’t even scratched the surface of what’s possible with bitcoin.”

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