The primary reason why people are using Bitcion these days is because they no longer trust government-issued currencies. Past global events have caused severe financial issues and problems to people all around the world, and have put a lot of countries' government financial status at stake, especially European countries. An example of this is the situation in Cyprus. People are taking their money out of banks because the government has been facing certain fiscal issues and is considering taking a percentage of what people have in their personal accounts to solve them.
These Bitcoins are not issued or run by a government or a even a private company, they are actually run by a computer code that distributes them to people for a certain amount. Therefore, by people's continuous demand for these currencies and their payments to get them, they are keeping the code running.
In April of this year, U.S. regulators have issued the first guideline for digital currencies; which have put some of people's initial doubts and fears about Bitcoin at rest. It is interesting to see how people are trusting the network more than they are trusting their banks and government. They are storing their money and relying their financial fate on a currency that is absolutely digital (although some might argue that this notion is not completely new or unheard-of because Bitcions act in a similar way to stock markets). It is currently estimated that a single Bitcoin sells for more than $190, and more than $2,000,000,000 dollar's worth of Bitcoin is circulating the internet.
Sources:
"Digital Bitcoin Currency Surpasses 42 National Currencies in Value." Fox News. FOX News Network, 8 Apr. 2013. Web. 18 June 2013. Retrieved from: http://www.foxnews.com/tech/2013/04/08/digital-bitcoin-currency-surpasses-42-national-currencies-in-value/
"Digital Currency." Wikipedia. Wikimedia Foundation, 16 June 2013. Web. 18 June 2013. Retrieved from: http://en.wikipedia.org/wiki/Digital_currency
I really like the idea of having a digital currency Having the government to help set up rules for is make it much safer for people to get it. I have a question about it. Can you basically buy things online using bitcoins sort of like paypal?
ReplyDeleteNot everything can be bought with Bitcoins. However, there are some places that actually accept them:
Delete"- Bitherbs; they offer organic and natural products, in addition to herbal goods that can all be bought using Bitcoin.
- BannerAdExchange; it gives people the opportunity to advertise something in exchange for Bitcoins.
- StompRomp; this is a guitar store that allows people to purchase using Bitcoins."
There are more places where you can use Bitcoins. Here is an interesting article I came across that might help explain Bitcoins better and give more examples on where they can be used: http://www.makeuseof.com/tag/what-can-i-buy-with-bitcoin/
As with any speculative market I feel there is a large risk to the bitcoin craze. I would not bet on it replacing hard currency at any point. I also feel that since it is not legal tender it's only value is as a barter tool. I am inclined to not trust it at all. I think the main advantage of the bitcoin is that since it is not a true currency it is not subject to the same legal restrictions, and is therefore used often in online black market transactions, such as The Silk Road.
ReplyDeleteI agree with Vince. I doubt Bitcoin will ever replace hard currency. Since there's so many threats to computer networks, it would seem that someone could successfully hack the Bitcoin code and gain access to unlimited amounts of it, making the coin less credible. If there's hard currency money laundering, I think the same could happen to Bitcoin, if someone is motivated and smart enough to crack the code.
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