Bitcoins - What Are they any why do I care?

Posted on: 23rd November 2013

A Bitcoin – a “new form of online currency” has made major news headlines across the globe in recent months, namely because it’s a great chance for the biased right winged news anchors to get their claws in a story they can label as “the digital REVOLUTION will destroy our Government”, but other than those idiots, it’s made the headlines due to the real possibility of shaking up the financial world as we know it.

The Bitcoin aims to be a completely anonymous type of currency, where the power lays with the people and not the “banks”. It’s a completely digital currency and you have complete control of your own Bitcoins, which weirdly enough you can potentially lose, as they are all stored in a secure “digital wallet” which is the Bitcoin owners responsibility to keep backed up/stored.

Other than the initial purchasing, Bitcoins are “created” and managed by the community itself.

Accompanying the recent press (October 2013) and headline news articles Bitcoins have seen a rocket in their cost. I should probably tell you here that Bitcoins cost real money to buy and it’s currently fluctuating vastly, at the time of writing a single “coin” will set you back £519, or $842. It’s also worth bearing in mind that it’s actually a decimal based coin, so you can purchase things online for a fraction of a coin.

Now consider this, in January of 2013, only 9 months before, a single Bitcoin would have cost you an average of £30, or $48.. that’s a percentage increase of about 1600%! Better than most share returns you will find.

Do I have own any Bitcoins? – No.

I was very close to buying a few hundred of them when the price was around £50 back in February 2013, but I resisted. Do I regret not buying? Yes, but it’s exactly the same as shares, with hindsight either comes regret or joy. If I had purchased them, and sold today I would have made a tidy sum, however they’re still a volatile expense. Maybe I would have sold when the price was £200, or maybe I’d still hold on to them currently in the hope they hit £1k p/coin, only to find the whole market crashes several weeks later?

So are these Bitcoins the future?

No.

At least, not as they currently are, as much as we may hype it to be the currency of the future as it’s so “open” and anonymous, that’s not what our thousand year history of economics is built upon. We rely upon structure and stability for a controlled economy. We are a very long way from getting the global economy to a stable level of inflation. A single currency based “planet” would be a very odd one. Zimbabwe with it’s current state of hyper-inflation would find it impossible to implement a secular currency which is of the same value the world over. If a coffee cost you 0.01 Bitcoin in america, in Zimbabwe would it be 0.000000001 BC? Either we need a stable and level monetary value basis or the whole principal doesn’t work, we rely on different currencies to help give redundancy to the global economy.

Stability within the Bitcoin itself is also needed, if today one Bitcoin is worth £519, but tomorrow it drops to £300, how would shops manage to control these price changes. Sure, in the future, we’ll have automated shops (online is easy), but this then puts the humans at a great disadvantage with no real monetary gauge towards the economic worthiness of items and products.

So why is the Bitcoin such a buzz word currently?

Most people don’t really understand what the Bitcoin movement really is. Currently people are hearing about the huge increases and fluctuations in the price of a BC, and stories of the people that have made millions by investing in Bitcoins. (On a side note, investing MONEY in a BITCOIN seems very paradoxical to me).

However, that negativity said it’s now or never for the Bitcoin, it is seeing a huge boom thanks to the current media attention, and most people are only interested due to the hype, when the hype ends they (the general public) will not be interested anymore, it’s either made to be a key player in the economic world now or it has a very unlikely chance of ever getting in. However, I’m sure if certain UN politicians happened to each stumble across a few thousand coins in their email accounts, it would start to look like a different prospect..

All in all my foresight is fairly bleak for the Bitcoin as much as I think this is what the world NEEDS it’s not currently feasible, however, they would still make a hell of a better birthday present than any of those “name a star” or “get your name on the moon” gifts you can buy, albeit a digital string of numbers.

Written By: Alex Wigmore