Bitcoin became very popular in 2013, when the value of a single unit of virtual currency rose from $13 to more than $1000 in a year.
Travelers began using Bitcoins while touring the world when a they noticed a Bitcoin ATM appeared in a Vancouver coffee shop. The U.S. Senate committee held hearings at which regulators supported Bitcoin and other virtual currencies.
Bitcoin ATM’s are now among British Columbia, Canada, Hong Kong, Europe and Asia, with talk about one in the U.S..
Bitcoin is not issued or backed by a government or a business, it runs on computer code on a decentralized network.
Businesses like Overstock.com and some Subway shops have started to accept Bitcoin, although, it is still not a universal exchange.
Why worry?Economists are skeptical of Bitcoin’s power because it lacks attributes of a useful currency. Money serves three purposes: functions as a medium of exchange, a unit of account, and a store of value.
The digital crypto-currency has been in major headlines for a while now. This week Bitcoin collapsed in the market.
Anonymous owners of black-market website Silk Road announced that hackers stole $2.7 million worth of Bitcoin. Exchange was halted to ensure the safety of customer funds. Also, Mt.Gox, one of the world’s largest bitcoin exchange, said it would temporarily prevent customers from removing their bitcoins from its online exchange. Investors are speculating that Mt.Gox may be on the verge of bankruptcy.
Bitcoin prices have plunged dramatically on Gox, see that the price of bitcoin on Bitstamp was $640 and $250 on Gox.
Bitcoin currency has been linked with payments of underground websites that deal with drugs, weapons and other illegal merchandise.
Since Bitcoin doesn’t have a currency characteristic, it cannot be deposited in the bank. It is held in ‘digital wallets’ that have proven to be vulnerable to thieves and hackers.
Lenders will not use bitcoins as a unit of account for consumer credit, auto loans, mortgages, or other credit.
Bitcoins future is wobbly, there are many reason why this new technology will disrupt our economy, good or bad:
- Bitcoin is evolutionary, the currency cannot exist without a computer
- Transactions are not overseen by the government, notary, or bank
- Bitcoin protocol flips automation upside down
- The Distributed Autonomous Corporation (DAC) may turn technological unemployment into structural unemployment
“[Imagine] a group of generals of the Byzantine army camped with their troops around an enemy city. Communicating only by messenger, the generals must agree upon a common battle plan. However, one or more of them may be traitors who will try to confuse the others. The problem is to find an algorithm to ensure that the loyal generals will reach agreement.”
Bitcoin is pseudonymous, not anonymous, it isn’t visible, although, it is possible to copy, print, and share the codes.
Along with Bitcoin, Mastercoin and Ripple have arisen. They are comparable crypto-currencies with an open source project that will add features to the Bitcoin block chain.
The Bitcoin block chain offers a platform that isn’t controlled by anyone. All can participate and the system cannot be manipulated by governments, corporations, or bankers.
Bitcoin is capitalism 2.0!The future will no longer be centralized! Democratization is the transfer of power from the elite to the crowd.
Bitcoin is the third democratization.
1st the Internet, it enabled the democratization of information.
2nd democratization with 3D printing, manufacturing where factories become obsolete.
3rd is democratization of money and finance. No more monopolies that control our money and business.
The currency application of Bitcoin was version 1.0. The block chain of Bitcion is 2.0 = CAPITALISM
These companies will “try to preserve the problem to which they where once the solution”. But the dramatic changes in business will unearth a major gap between traditional approaches to strategy and the way the real world will work. It is “the end of competitive advantage” as we know it.
This continuing trend of Big Business may lead to more than 70% of the 1000 Fortune companies to be replaced.
Countries, nations, bankers, stock brokers, insurance companies, and notaries are all going to be heavily affected.
What do you think the future of Bitcoin will bring? Please leave your comments below!
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Bitcoin: It’s the platform, not the currency, stupid! – The Next Web
Bitcoin Lacks the Properties of a Real Currency – MIT Technology Review
Bitcoin Exchange Prices Plummet as Investors Brace for Bankruptcy – WIRED
Bitcoin Exchange Bitstamp Halts Withdrawals Citing Denial Of Service Attack – Tech Crunch