Bitcoin Rising
Bitcoin Rising
Bitcoin seems to be the water cooler subject du jour. It has had a dramatic leap in value over the past 3 months. Bitcoin has risen from $15 to $141 since January. If you are asking “what is Bitcoin?”, you are not alone. While it has grown in popularity in many circles, it is rarely mentioned by the mainstream media.
Bitcoin is a crypto-currency, an alternative currency that uses cryptography to control its creation. Bitcoin is decentralized and currently not subject to the control of any nation or government. This makes Bitcoin very attractive to users who want to purchase goods and services anonymously. Bitcoin can also be transferred across borders without the normal headaches of sending large amounts of cash from country to country.
The growing popularity of Bitcoin has brought about a Bitcoin exchange. While it is decentralized and can be traded anywhere by anyone, Mt. Gox handles 80% of Bitcoin exchanges. Bitcoins are now available through ATM’s in some countries. They can be bought and sold with cash or credit cards through the ATM machines. Bitcoins may be stored in virtual wallets which can be accessed through an application on your smart phone.
Bitcoin is as unrestricted as the internet. Bitcoin is not subject to government controls. The only way to restrict the use or transfer of Bitcoin is to restrict all internet traffic within the region or country. To do so would require the types of control used by China to restrict internet access to its citizens. Once those controls were put in place, they would only be effective in that region. It is conceivable that all the countries in the UN would pursue a joint initiative to clamp down on the use of Bitcoin. As its popularity grows, so does its threat to the currencies of central banks and taxing authorities. The UN has been looking for an excuse to get involved with regulating the internet. Bitcoin would make a great talking point in their effort to push that agenda.
As Bitcoin is mined through a cryptographic process, computers are given complex algorithms to solve. When solved, Bitcoins are awarded to the miner. People with home computers that mine Bitcoin often join mining groups to combine the efforts of their computers. A single home computer is generally not equipped to ever be able to mine enough to reach the 50 Bitcoin threshold in which they are awarded. Some people purchase sophisticated computer hardware for the sole purpose of mining Bitcoin. With current prices, this option is becoming more cost effective.
Bitcoins do offer a level of safety against loss of value from over creation by central bankers. The algorithmic process keeps those limits secure. However, we must remember, anything that can go from $15 to $141 in 3 months can also go from $141 to $15 . Don’t bet what you can’t afford to lose.
I should also mention the picture at the top of the post. It is and isn’t a Bitcoin. Bitcoins exist only in cyber space. They don’t have a physical form. The Bitcoin in the picture is a physical vehicle in which you could own a Bitcoin. It is similar to a gift card. It represents an amount of currency in an account. It has a code on the outside which can be used to verify the amount in the account and an interior code which must be accessed by breaking a seal to obtain the credits online.
Two recent interviews on podcasts that I listen to frequently are accessible through the links below. They each take a side on Bitcoin.
Click HERE to listen to Chris Duane take the “con” side of Bitcoin on The Financial Survival Network with Kerry Lutz.
Watch the video below to listen to Jon Matonis of The Bitcoin Foundation take the “pro” side of Bitcoin on The Gold Money podcast with Andy Duncan.
As for myself, I will probably watch from the sidelines and keep stacking gold and silver. I prefer to wait for the kinks to get worked out on new technology. While I may be missing a great investment opportunity, it is also possible that another crypto-curency will emerge as the leader. Are you old enough to remember when Yahoo was the dominant search engine? People used to pay for AOL e-mail accounts. Now, you rarely hear of anyone that has one at all. Technology changes so fast and industry leaders often emerge long after product trial periods.
Happy Prepping!
