Bitcoin, What is it and should you care?
Bitcoin has been getting a lot of attention lately, and it should. Why? Well lets start with what it is.
Bitcoin is a “virtual” currency. Many call it “Crypto currency”, probably because of the security necessary to give it any illusion of security. Bitcoin works similar to electronic banking. You have “bitcoins” in your account, and you use them to pay for things electronically. So the question is why not just use dollars or euros? That is the question no one can answer. Some claim that Bitcoins are used to fund illegal activity since bitcoins aren’t tracked until they turn back into traditional currency.
Why Bitcoin is important.
The ability of an investor and a business to create a currency out of thin air with no value and no guarantees should be of concern to every government, particularly the US government. If trade can occur without using the world reserve currency, which is currently the US dollar, there is no reason for a reserve currency.
In effect Bitcoin is an electronic barter house where the value is set by the buyer and seller. The odd part is the value. At just $1200 US per bitcoin in 2017, and now trading between $40,000 and $60,000 US per bitcoin now, something is amiss. Is the need to trade product “off book” so great to warrant this growth?
Does Bitcoin have real value?
A recent study at New York University by David Yermack concluded that Bitcoins were merely a speculative investment. At the same time he said that the financial markets don’t have derivatives and therefore can’t bet on or against bitcoin. That sounds like gambling.
How does Bitcoin make money.
Obviously, the first sale of Bitcoins to the orignial buyers was a source of funds for the creators of Bitcoin. The question is how do they keep making money? The obvious answer is they keep creating new bitcoins, just like government print paper money. Do you care who guarantees the money? Is there really a difference?
Can You Make Your Own Bitcoin?
The answer is yes of course you can. The trick is convincing people and businesses that your uCoin is safe, secure and reliable. I have some clients who don’t trust electronic banking and send in checks every month. There are over 50 tradable virtual currencies out there. The big difference is you can load a debit card with Bitcoin at ATM’s now.
Isn’t it a little odd that New York University bothered to study Bitcoin? After all it’s only “value” is created out of thin air. Once upon a time this was called “snake oil”. The real question is, when will the Bitcoin bubble burst, or do people trust Bitcoin more than the US government?
My two cents or .00000000000002 bitcoins is this. All money is fiat money. Sitting across from a sheik many years ago in another life, he slid a coin across the table and said this is the only thing that will ever have true value. The coin was solid gold with his face on it. That sort of says it all doesn’t it?