Is Bitcoin A Fad, Or The New Global Currency?

First Things First, What is Bitcoin?

Bitcoin is a decentralized digital currency based on an open-source, peer-to-peer internet protocol. In more simple terms, bitcoins may be purchased and exchanged  by a consumer through a personal computer without the involvement of a central bank. Instead of being issued by a government or private company, Bitcoin is a currency run by computer code which distributes new bitcoins at a fixed rate to web servers who are devoted to keeping the code running. Users can access exchange sites where they are able to transfer fiat money, ex. US Dollars, for the digital currency. Started in January of 2009, Bitcoin recently reached its highest valuation ever at a price of 90 US Dollars per bitcoin.

The rise of Bitcoin, Correlation or Causation?

As banks in Cyprus are threatening taxation of bank accounts as a method of helping with their economic crisis, the bitcoin has seen a rise in value from around $15 in January of 2013 to around $90 currently. Many europeans fearing similar proposals in countries such as Portugal and Greece have invested large amounts into the virtual currency. This could be viewed either as correlation or causation, but only time will tell.

The Benefits Of Bitcoins

There are many advantages to Bitcoins. They are easy to transfer, to secure, to verify, and to granulate. They are not debt based and do not rely on a central authority. Compared to other electronic fiat moneys, they are potentially anonymous, and both faster and cheaper to transfer. By being a decentralized system, bitcoins cannot be printed at the subjective whims of the their controllers, they cannot be destroyed by attacking a central point of control, and are not subject to arbitrary rules imposed by controllers.

In conclusion Bitcoins can be a successful alternative to fiat currency, but only if a large majority of the network backs the system. As bank’s practices become increasingly unattractive to consumers, bitcoins can see an increase in usage and  in the process, a strengthening of its system.

Yours Truly,

G.Vas

sources

http://www.foxnews.com/tech/2013/03/29/digital-currency-bitcoin-surpasses-20-national-currencies-in-value/

http://www.ibtimes.com/bitcoins-accepted-payment-expensify-virtual-cash-surpasses-value-20-national-currencies-1160905

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5 thoughts on “Is Bitcoin A Fad, Or The New Global Currency?”

  1. I definitely learned something new after reading. Is this is similar to how, on a mush smaller scale of course, universities use their own currency rather than fiat money, eg Diamond Dollars here at Temple?
    My other question here would be how exactly do these countries see the bitcoms affecting their money markets and economy?

  2. I first heard of Bitcoins on a NPR podcast a year or two ago and thought it to be a fad among paranoid people who fear governments and businesses.

    Here we are in 2013 and Bitcoin is as strong as ever and growing. Now, are there more paranoid, government/business fearing people, or is there legitimacy to this currency? I think it is the latter. The biggest draw of Bitcoins has to be its ability to safely purchase good online. It is the equivalent of using cash in a brick-and-mortar store. You hand the cashier physical cash and get your good. There is no possibility of your credit card being left at the store or its information being stored because you never used it. This is the same principle with Bitcoin online and its legitimacy is only strengthen as governments start defining the legal parameters of virtual currencies — these currencies are seen as legal, so go ahead and use them seems to be the general thought at the moment.

    I will be more interested in Bitcoin in 2019 ( a decade after its release) to really see if it has staying power as a currency and the inroads it may have made to become the currency of choice for the average consumer.

  3. Neat Article, I was just reading an article about Cyprus’ implementation of capital controls and how this affects the purchasing power of a Euro in Cyrus, compared, to say, Germany. Even though both countries use the same currency there are very different valuations in what that currency can be and given the current state of Cyprus the article suggests that the currency, or Euro, is weaker in Cyprus, and thus provides the owner of the Euro with less when he spends it in Cyprus. Wasn’t the Euro created to prevent this from happening? by unifying the currency Europe was to create a larger market for the Euro while also reducing the burden of exchange rates thus creating a larger simplified network for trade as each country now operates under one currency. I guess what i’m trying to get at that bitcoins’ value is dependent upon those who use it. Personally, i would never purchase a bitcoin. As for someone in Cyrus who is expecting a bank run, maybe so. Anyways, its very ironic that a currency put in place to lessen the socio-economic divide between European nations has increased this disparity more so.
    MOS

    http://www.npr.org/blogs/money/2013/03/27/175460747/what-if-you-couldnt-take-your-money-to-another-state

  4. The BitCoin phenomenon is very interesting. It seems that everyone familiar with the topic have a different opinion on it; some believe its the future of online purchasing, others tend to believe that it’s a black-market currency doomed to fail.

    One thing that to me seems important to note is that BitCoins ARE being used to purchase illegal substances (drugs, explosives). BitCoins make it very easy for purchasers and sellers alike to exchange illicit materials because the anonymity provided by the currency. It will be interesting to see how this problem is addressed in the future, because one thing is for sure: BitCoins are sticking around.

    http://motherboard.vice.com/blog/traveling-down-the-silkroad-to-buy-drugs-with-bitcoins

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