Bitcoin: The Currency Of The Future?

bright-future-ahead27 Jan 2014 / Forbes – Saturday January 25, marked the start of the Miami Bitcoin conference.  When I first told my partners I planned to attend, one asked “Why go to a conference when you can read about it on Wikipedia?”  There were two answers to that question.  One: the Wikipedia reference is pretty much incomprehensible to a non-technical human, and Two:  Retailers are starting to take it as a valid form of payment.  That means I need to understand it clearly.  So, off I went.  And I learned quite a bit that I’d like to share with you.

So, what is Bitcoin, anyway?  As I see it, it’s a cross between a stock and a form of payment.  It’s a form of payment because you can use Bitcoins to pay for things.  You can buy computers on, you can buy pretty much anything on OSTK -2.74%, and apparently, some enterprising young California girls are letting you buy cookies with them. You can also send small amounts of currency to people in other countries, without worrying about exchange rates or currency conversion fees.  And this last is pretty important.  No currency conversion or exchange rates.

It’s a stock because there’s a fixed number of “Bitcoins” in the universe.  The value of each Bitcoin fluctuates based on the law of supply and demand.  The more people that want to use them, the higher their value.  One friend anecdotally reported Bitcoins bought in 2009-2010 for $1 (USD) each were recently sold for $1,200.  That’s a lot of appreciation.  But it’s not what Bitcoin’s evangelists focus on.

Marc Andreessen, founder of Netscape, recently wrote the best piece on Bitcoin I’ve read yet.  You can read it here.  On the flip side, Paul Krugman, Nobel Prize Winning economist seems to think it’s the devil’s spawn, ratcheting up the rhetoric in his recent piece titled, “Bitcoin Is Evil.”  No ambivalence there.  Some of what I heard at the Bitcoin conference helped cut through the noise….. Read more

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