Tuesday, 19 February 2013

Can bitcoin change society?

Bitcoin was launched in 2009 as an experimental digital encrypted currency with very unique properties that sets it apart from all other currencies in use today. Bitcoin is open-source, decentralized, impossible to counterfeit and rare, as the algorithm will only generate around 21 million bitcoins. The short video below succinctly explains some of its properties and advantages.

If you research bitcoin enough at some point you'll wonder how you can start mining this new crypto-currency yourself. It was in this search that I stumbled upon, Geir Harald Hansen, the creator of bitminter.com - a bitcoin mining pool made easy for beginners. Geir kindly and honestly answered a few of my questions regarding bitcoin. His thoughts on the potential success of bitcoin and comparison to current currencies, I thought were worth sharing below.

Can Bitcoin change society?
Take a look at the world economy. One financial crisis after another. Venezuela recently devalued their currency. The US is printing money faster and faster. Or rather they are creating crazy amounts of US dollars by typing a number into a computer. Fractional reserve banking. Banks too big to fail. The US and several other countries are effectively bankrupt as they will never be able to pay their foreign debt. Welcome to the circus. The entire world economy is just a giant ponzi scheme. Whether you are a scammer depends not on what you do, but on whether or not you work for a government. I can't decide whether it is funny or sad. Maybe it's both.
Part of bringing sanity to the economy is to use things that are actually in limited supply for currencies and stores of value. Environmentalists may not agree, but there are plenty of trees to make paper money from. Typing a number into a computer is not limited supply either. Gold, silver and bitcoin on the other hand are in limited supply. Perhaps something better than bitcoin will appear. But I'm pretty sure fiat money is not the future. I think society may soon be ready for a change. But most people still just do what the masses do. Anything that is not mainstream is "not real".
Many think Bitcoin is monopoly money. Actually it is US dollars, Euros, etc. that are printed en masse like monopoly money. Bitcoin is nothing like monopoly money. But this thinking is based on emotion, not logic. Fiat money is "real money" because this is how we've been doing things for hundreds of years. Anything that is different from the established way is wrong, silly, or not real. This way of thinking greatly slows down bitcoin adoption. But at the same time an increasing number of people are getting fed up with the current system, and "banker" has become a swear word. As the global ponzi scheme nears collapse and more people are adversely affected by it they will be less inclined to cling to it just because it's tradition.
Whether buying ASIC-based Bitcoin mining equipment will be profitable is anyone's guess. Anything related to Bitcoin is a gamble. Don't invest more than you can afford to lose. But do get involved with Bitcoin in some way or other. Years from now when people laugh about fiat currencies and how primitive the world used to be, you can say you took part in changing it. This could be an important moment in history.

Bitcoins can be exchanged with all currencies. At the date of this post 1BTC =  £17.64 = $27.30 = €20.34, could this be the digital gold rush?

If you want to find out more and/or get involved, check bitcoin.org

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