Categories

Economy & Politics

Tools

  • Economy & Politics
  • Investing
  • Personal Finance
  • Related Posts


    You Know It’s Bad When…
    China Manufacturing PMI Explodes To 18-Month High, Employment Drops 9th Straight Month
    The Real Evil Of Monetary Central Planning
    Americans Are Living In ‘Atlas Shrugged’
    Why “The US Should Have Already Panicked,” The Sectarian Divide Mapped Out
    Senate Democrats Push To Triple Israel’s Iron-Dome Aid To $576 Million
    Head Doctor Fighting Africa’s “Out Of Control” Ebola Epidemic Contracts The Virus
    The Decline Of Influence
    GOP Offers Immigration Proposals, Democrats Want Money Without Policy Change
    Don’t Believe Those Lying Job Numbers
    Justice Kennedy Needs A History Lesson
    Another Day, Another IRS Revelation: Backups From The Lois Lerner Era Do Exist, Commissioner Admits
    Americans Feel Increasingly Divided, Fault Obama And Congressional GOP
    Western Threats Mean Little To Putin
    Party Democracy Keeps U.S. Democracy Alive


    Bitcoin May Be Revolutionary — But It Still Faces Real Hurdles

    Bitcoin, the Internet-based, borderless digital currency not governed by any state monetary policy, has been around only since 2009, but it’s already begun gaining acceptance among people in distressed European economies, as well as a few jaded Americans who’ve lost faith in the future of traditional currency.

    While Bitcoin continues to be lauded for its independence from “artificial” economic controls, allowing both its supply and its value to be dictated by market conditions, it’s not free from all the drawbacks that affect traditional currency. Its unit value has fluctuated wildly — from as little as $13 to $266 and back again — just since January. Some see it as a place to store money; others see it as a true currency, meant to be used to effect transactions.

    Anonymity is an attractive feature of Bitcoin. The peer-to-peer network that facilitates encrypted Bitcoin transactions isn’t centralized, and it isn’t owned by any entity. One computer can drop out, or another join into, the network, and the underlying system still won’t change.

    And because people can confidently spend Bitcoins without any record that traces the transaction to either the buyer or seller, Bitcoin is a preferred payment method for acquiring illegal items — think military-grade weapons, drugs, crime for-hire or, potentially, stolen art and jewelry  — on “Deep Web”-based black markets like the Silk Road.

    But law enforcement is starting to figure out ways to break through the wall of anonymity, and the publicity that comes with drug busts and pornography rings could eventually recast popular perception of Bitcoin, rightly or wrongly, as a currency for criminals. Who knows what that would do to its value? Even now, the Silk Road already has an escrow account in place so customers who opt in can hedge their buying power against Bitcoin’s volatile nature.

    Perhaps most importantly, though, is that Bitcoin — or any “alternative” currency — can’t replace the trust-based foundation on which any system of currency is based. Harvard Public Policy professor Steven Strauss explains this very well in a recent Huffington Post article.

    “Bitcoin requires us to replace trust in legal systems, institutions and procedures, with a system where we must [among other things]… [t]rust that your Bitcoins are stored in a secure location,” Strauss writes. “Precisely because Bitcoin transactions are anonymous and non-reversible, they’re highly vulnerable to theft. If your Bitcoins are stolen, they’re pretty much untraceable.”

    Best bet: If you’re interested in alternatives to debased traditional currency and see Bitcoin as nothing more than an interesting experiment in how a borderless, decentralized exchange system could function, there’s probably little to lose in converting a few real dollars into Bitcoin, making a small purchase or two and getting a feel for the way it all works.

    But if, like some, you’re converting your dollars to Bitcoins in the hope they’ll  retain (or grow in) value over the long haul, you’re probably taking a tremendous risk — at least for now.

    Discuss this Story:

    Comment Policy: We encourage open discussion. Comments including racist statements, profanity, name calling or spam will be removed at our discretion. We use filters for spam protection. If your comment does not appear it is likely because it violates the policy.

    Europe Sleeps As Putin Waits
    The Fed Can’t Lower Your Grocery Bill
    Why Putin Isn’t Afraid Of Europe
    Liars, Cheats And Communists
    Eric Cantor’s Obvious Next Act
    Jobless Claims Fall To Lowest Level Since Early 2006
    Global Economy Starts Second Half On Solid Footing
    China July HSBC Flash PMI At 18-month High
    Bank Settlements Create Windfall For U.S., And Wrangling Over How It Is Spent
    As U.S. Strengthens, Sluggish Wages Explain Fed’s Caution
    Republican Lawmaker To Grill U.S. SEC Over Ackman Tactics
    An Annotated History Of World Oil Price Shocks
    Insolvent Chinese Construction Company Gets Last Minute Bailout, Avoids China’s Second Bond Default
    Rebels Shoot Down Two Ukraine Fighter Jets, Defense Ministry Reports
    US State Department “Confident” MH17 “Mistakenly” Downed By Separatists, Finds No Direct Link To Russia
    The Stealing Of America By The Cops, The Courts, The Corporations And Congress
    Poroshenko Demands Ukraine Separatists Be Declared “Terrorists” Under International Law
    Krugman’s Latest Debt Denial: Why His Two Magic Numbers Don’t Cut It
    The Baltic Dry Index Collapses To 18-Month Lows; Worst July Since 1986
    California’s Drought Could Tip America Toward Economic And Social Turmoil
    IRS Says Lerner’s Emails May Be Recoverable After All
    Department Of Justice, Homeland Security Must Go On Offensive Against Growing Right-Wing Threat
    Is There A Fracking Bubble?
    This Emerging Malware Sends Secret Messages And Is Practically Impossible To Detect
    The Long-Term Joblessness Battle Isn’t Over
    Courts Can’t Fix Obamacare
    When Terrorists Have Drones
    Japan Readies Fuel Cell Subsidies In Bet On Toyota’s Next Big Thing
    U.S., European Airlines Halt Flights To Israel Due To Instability
    Puerto Rico Debt Crisis Headed For U.S.-style Bankruptcy Resolution
    Read more from Economy & Politics...

    Liberty Investor Digest

    Get today's most important
    financial headlines all in
    one place by email!



    Sources


    close[X]

    Sign Up For Liberty Investor Digest™!

    Get Liberty Investor Digest FREE By Email!

    Input your name and email address in the fields below and get today's most important financial headlines sent straight to you inbox!

    Privacy PolicyYou can opt-out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.