Would You Ever Use BitCoin?

Last updated on: June 28, 2011 at 7:00 am by Tim

Would You Ever Use BitCoin? 2011-06-28T07:00:18-05:00 Tim

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If you haven’t heard of Bitcoin, you’re not alone. It’s an online currency that was created in 2009 by Satoshi Nakomoto (most likely not their real name according to most people). The idea was to create a decentralized currency – which means that it has no central form of control or ability to be manipulated. The U.S. has a centralized currency maintained by the Federal Reserve. The Fed can add or subtract the money within the supply, hence the phrase ‘centralized control.’ With the Bitcoin, the currency is created at a steady, predetermined rate called ‘mining.’ The mining of Bitcoin is to emulate a form of mineral that has a limited supply. The mining of Bitcoin is calculated to end in 2030 with about 21 million Bitcoins in circulation. (Some think that the Bitcoin will be well accepted by those who support a gold standard. See our article Is Gold A Good Investment for a closer look at investing in a commodity.)

Interesting TidBits…

In theory, inflation should not exist with Bitcoins. This is because the volume of coins cannot be manipulated and created, thus lowering the purchasing power of outstanding Bitcoins.
Reimbursing someone in Bitcoins for a product or service is considered to be bartering. This will certainly be interesting to watch as governments try to enforce taxes somehow on transactions through Bitcoins.
No central bank controls the Bitcoin. The network is supported through open source communities.
The Bitcoin has recently seen a severe drop in value, not surprising, as it is known to fluctuate quite a bit on a daily basis.

Want my 2 Bitcoins?

I don’t know if I will be using the Bitcoin any time soon. I’m not convinced of its security features and really don’t have a good understanding how it works. The purpose of this article wasn’t to explain in detail how the Bitcoin works…see this article from The Economist for a better understanding.)

Have you ever heard of the Bitcoin? Would you ever use something like this?

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