New Money

Bitcoin: The Currency of the Future Is Already Here


I know, Graham, I know. I turned the story in two weeks ago, we wrapped up the editing last week, and sent it to press yesterday. And then the next thing you know...
Which also goes to show why bitcoin right now is not a success. The "value" of a bitcoin is counter-productive to the intent of the bitcoin. The instability makes it almost worthless as a currency. Instead, it is currently an investment with nothing to back it - no company, no government, only the theory that you could one day spend it on something other than actual currency.
Not all that funny, Graham, I just checked and the value of a 2009 Whiffies fried pie is back up to $650,000. (Luckily I have one in the freezer.)
Bitcoin is just a ponzi scheme, despite what they'd have you believe. Over half the amount of the currency that will ever exist, already does. And it's being held by a relatively small amount of people. The investment it took to get those bitcoins is a several hundred, or even many thousandfold return based on the current "value" of it, so of course they want you to believe it has worth.

Just a libertarian wet dream based on the nonsensical notion that scarcity in and of itself makes something a valid currency.
The dollar has lost 98% of its value since the creation of the privately owned Federal Reserve, 100 years ago tomorrow. Since that time the Fed has been responsible for just as many recessions and/or depressions as the previous 100 years, and this is not counting the absurd panics, bailouts, unlimited QE's, and asset bubbles that they’ve created.

Be it Bitcoin, or any number of alternative currencies that are sprouting up like wildfire, I know where I'm going to be betting my money on the future.
@Paul: What's woefully ironic is that the European Central Bank has been shouting "ponzi" about Bitcoin since October 2012. Central banks like the ECB and Federal Reserve are at the top of the currency issuance pyramid. Where's the anger? The answer is there's no need to be upset about any of this, because any and all currency systems, Wall Street stocks, and investments in general primarily benefit those who "get in early". If anything, people are mad jealous because everyone knows they could've got in on Bitcoin at a ridiculously low price by some crazy stroke of luck akin to winning the lotto. Remember, Bitcoin is a global currency, with a market cap of just under $10B. That is a tiny, tiny thing in the scheme of things and you're lucky the Merc is even willing to write this article about it, given how often Bitcoin is lambasted by the media.

There's nowhere you can turn to in this world and not face investments that benefit its earliest adopters. It's quite healthy to see this, but even healthier is to recognize that Bitcoin is infinitely more fair as a system than the Federal Reserve system which is run by old, wrinkly white men in top secret locations. Conversely, Bitcoin is open source computer code owned by no man, company or government. That is simply refreshing. Because Bitcoin is open source, if you think the system is unfairly benefiting its early investors, you're free to make your own clone of Bitcoin and launch your own currency. It's been done 100s of times, and we keep coming back to Bitcoin because it has the largest userbase and the most real world companies supporting it. Take Coinbase for example, which just raised a $25,000,000 round from Andreessen Horowitz.

Bitcoin is not only interesting from a freedom-from-the-Fed perspective, it's a genuine innovation: it was the first technology ever to solve the Byzantine General's Problem. Essentially, human beings participating in an online network have never before been able to agree upon the allocation of value between them without a third party. Because Bitcoin solves this, it doesn't need companies or governments to work, meaning we don't need a hierarchy of any kind to manage money. No hierarchy needed, no government needed, no Federal Reserve needed, no banks needed.

All of this makes Bitcoin particularly well-suited for the Internet. You can accept money directly from your users, without involving a bank or government, and without expending any more effort than posting your email address.

Only 21,000,000 Bitcoins in total will ever be created. For a global currency, that makes each unit very, very rare. The revolutionary aspect of Bitcoin alone, combined with its rarity, makes each BTC practically a collector's item. 1000 mBTC, which is the next unit down, has been worth as much as $1240. This is serious money, and we're not even close to seeing widespread adoption. We're not even to where the iPhone was in 2006. This is like the Internet in 1992.

As more and more people wake up to the fact that Bitcoin is here to stay, the price will naturally increase.
Only 1,000 Meckcoins in total will ever be created (I'm gathering the butcher paper and aluminum foil now), so get your offers ready, and they'd better be good.