WSJ: Bitcoin Experiment in Real Life – how to use this virtual currency.

WSJ: Bitcoin Experiment in Real Life – how to use this virtual currency.

Interesting but I’m not ready to plonk down $162 to experiment…

WSJ:   Bitcoin isn’t ready to replace credit cards or PayPal. It lacks wide acceptance, consumer protections and stability. The currency is in crisis right now, after hacking attacks disabled two of the biggest exchanges, making bitcoin lose a third of its value. During the course of a week, my own bitcoin lost as much as 7% of its value.

But that isn’t stopping me from keeping a small wallet of the first major Internet currency. I’m no speculator, I’m not investing my savings in bitcoin, or recommending that anyone does that. I’m interested in what it might enable—a “tip jar” for online art, or small daily donations to charity. And if you’re intrigued, too, this column will hopefully help you keep from losing your shirt.

The good news is you don’t have to put much money at risk to try it out. I didn’t even buy an entire “coin”—just 0.25 of one, or about $160. I signed up for a virtual wallet, which promises to safeguard the string of code that is your money, and exchanges dollars for bitcoin (and vice versa). I recommend Coinbase, whose wallet connects to your regular bank account and charges a small fee, about 1%, with each trade.

Are these people trustworthy? Coinbase is backed by some big names in Silicon Valley, but has nothing like the government-backed guarantees of using dollars in a regular bank. In the past 15 months, Coinbase says it has set up nearly one million consumer wallets.

What surprised me most is how Coinbase strips some anonymity out of the currency. To buy bitcoin, it asked me for my bank account information, my credit-card numbers, even my bank website login details. The company doesn’t retain all that info but it is used to speed up the verification process, which can normally take four days.

The point of gathering all this information, says CEO Brian Armstrong, is to prevent “shenanigans,” so the traditional banks will see Coinbase as legitimate.

oinbase has done a good job of simplifying bitcoin use. To pay for sushi at a local shop, I used the Coinbase app on my Android phone to scan the QR code presented by my server. (Apple hasn’t yet approved the Coinbase app for iPhone, but you can make payments via the Web.)

Once I confirmed my sushi payment, the money transferred instantly. For consumers, bitcoin’s speed can be a dual-edged sword: If something goes wrong, there’s no third party to intercede and get your money back. And returns can be tricky on a currency with a wildly fluctuating value. (Fortunately, I had no complaints about my sushi.)

Making a purchase online works much the same. At the Overstock.com checkout page, I chose to pay by bitcoin, and then scanned an on-screen code with my phone.

So why bother using bitcoin? Bitcoin doesn’t really solve mainstream consumer problems like speed and convenience, says Mark T. Williams, who teaches finance atBoston University and is a bitcoin skeptic. “It solves a problem if you want to send stuff secretly.”

Getting merchants on board will be a slog. Some 3,000 businesses around the world accept bitcoin for payment, according to Coinmap.org. There are more than 60 in theSan Francisco Bay Area where I live, but I still struggled to find places worth spending my bitcoin. When I did, paying with bitcoin was usually speedy, but certainly not faster than using a credit card or cash.