Tuesday, April 9, 2013

BitCoins | The Anonymous Currency

BitCoins are a decentralized, and anonymous online currency that are used to purchases goods and services. This video summarizes BitCoins better than I ever could. However some highlights to mention is that BitCoins are mined through a computer application running on your computer, they are produced at a predictable and limited rate. BitCoins can be stored in your digital wallet, much like one you might have with your banks website. It's an open source currency that does not limit the user. BitCoins can be used to purchase legitimate and illegitimate services.

According to the Harvard Business Review, "(they are) worth whatever someone will pay for a unit of the online currency, which as I write this is $209, up from $142 last Friday, $44 a month ago, and $4.93 a year ago". Currently I am seeing BitCoins being sold and bought for around $230-275 per coin.

Is it a threat to modern currency? Unlikely at this point in time. Consumers want "stability, not price appreciation". As the BitCoin bubble continues to rise, the practical and actual use of the currency lessens. However, it's attracted a lot of attention from speculators trying to make a quick buck. BitCoins have also been accused by some people as being a threat to modern civilization, as people would use the currency as a means of "tax evasion". Not that tax evasion isn't already a common practice in most western societies. BitCoins aren't going to send an untainted system into a spiral of abuse - we've already done that quite well on our own without BitCoins.

Do I personally believe a percentage of people are using BitCoins as a means of conducting illegal business? Absolutely. However, I believe people are also using BitCoins for legitimate services. BitCoins are relatively new to the public sphere, and the impact it will have on governments and society is still unclear. Governments who openly tried to stop or impede P2P (Peer to Peer) interactions, including BitTorrent have all failed horribly. Trying to stop BitCoins will likely yield the same result.

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