My friend Jerry Brito is one of the best-connected and most insightful observers of the Internet I know, so when he starts talking up an Internet trend, I pay attention. But after reading his case for Bitcoin, a new digital currency, I remain a skeptic.
The article is worth reading in full, but here’s an important part of his case for Bitcoin:
The web has also seen all-purpose digital currencies, from defunct dot-com bubble start-ups Flooz and Beenz, to the slightly more successful e-gold. Unlike cash, however, digital currencies to date have had a third party intermediary monitoring transactions. That’s because digital cash is different from physical cash in one very important way: If I hand you a 100 euro bill, I no longer have it. You can’t be as sure of that, however, when the cash is just 1’s and 0’s. So it’s been necessary to have a trusted intermediary deduct the amount from the payer’s account, and add it to the payee’s.
Bitcoin is the first online currency to solve the so-called “double spending” problem without resorting to a third-party intermediary. The key is distributing the database of transactions across a peer-to-peer network. This allows a record to be kept of all transfers, so the same cash can’t be spent twice–because it’s distributed (a lot like BitTorrent), there’s no central authority. This makes digital Bitcoins like cash dollars or euros: Hand them over directly to a payee, and you don’t have them anymore, all without the help of a third party.
It’s an intriguing concept, but the fundamental question about any currency is whether its value will be stable over time. I’ll discuss why this seems dubious in a series of two posts. Today I’ll focus on the demand side; tomorrow I’ll consider claims that the supply of Bitcoins will be more stable than traditional currencies.
The fundamental demand-side problem is that it’s not clear why anyone would want Bitcoins—which are, after all, just entries in a database—in the first place. The obvious retort is that the same objection could be made of any fiat money system. The value of a fiat currency like the dollar is a matter of social convention: it’s valuable to me because other people will accept it as payment for stuff I want to buy. Theoretically, if you persuaded everyone that dollars were worthless, this would become a self-fulfilling prophesy. Conversely (the argument goes) all we have to do to make Bitcoins a “real” currency is to persuade some people that it’s valuable. And apparently, the creators of Bitoin have already succeeded in this task.
But dollars have at least two advantages over Bitcoins. The obvious difference is that the United States government requires taxes to be paid in US dollars. Since federal taxes represent a significant fraction of most peoples’ income, they will continue to demand dollars even if they prefer another currency for day-to-day transactions.
The more subtle difference has to do with network effects and transaction costs. Dollars underpin the American economy in essentially the same way that the TCP/IP protocol underpins the Internet. The original choice of a medium of exchange was arbitrary, but people needed to pick something and once the dollar was chosen it acquired tremendous momentum. Convincing Americans to switch to a currency other than the dollar is roughly as futile as convincing the Internet to switch to a protocol other than TCP/IP, and for the same reasons.
First, people have made tremendous investment—emotional, financial, and technological—in dollars. Millions of vending machines and cash registers are designed to work with dollar-denominated coins and bills. People expect to see dollar-denominated prices in stores, and they have an intuitive sense for what’s a reasonable dollar-denominated price for a gallon of gas or a dozen eggs. They have dollar-denominated bank accounts, get dollar-denominated paychecks, and expect to retire on dollar-denominated pensions. It’s really hard to persuade Americans to use something else.
Second, currencies are subject to massive network effects. It’s much more convenient to carry a currency that 99.9 percent of people accept than the currency that 0.1 percent will take. People who hold obscure currencies have to waste time and money converting it to a more popular currency before they can perform everyday transactions. And people who conduct business in multiple currencies not only have to perform a lot of extra math, they also have to worry about exchange rate risk—the risk that a change in exchange rate will suddenly make a previously profitable business model suddenly unprofitable.
Together these factors make the demand for dollars “sticky.” It’s hard to see any analogous stickiness in the demand for Bitcoins. As far as I can tell, there are few, if any, markets where Bitcoin transactions are more convenient than traditional fiat currency transactions. I’ve read some claims that Bitcoin is popular in the drug trade and other illicit markets, where the lack of intermediaries has obvious advantages. It’s hard to judge whether these claims are true, or whether such markets are substantial enough to support a new global currency, but I have my doubts.
Illicit uses aside, the demand for Bitcoins seems to be driven by a combination of speculation and ideological enthusiasm. And we have a word for an asset whose value is driven by irrational exuberance: a bubble. I predict this one will pop once the novelty wears off.
You got some fool here who thinks he is going to pay people in WoW dollers,
is that some idiot putting up thier account number ?
What does that tell you? do you know any intelligent person in existance in this world who would plant a Real bank account muber up on the WEB .
Hey watch the movie IDOCRACY, cause TAG you it.
Bitcoins could potentially retain value the same way any other ‘collector’s item’ will retain value.
I can think of a scenario where some crazy person will want to buy up ALL THEEE BITCOINS (especially if the bubble bursts, and they become cheap enough to afford to own all of them) and will be willing to pay real world money for them.
Why are collector’s items valuable at all? Why is gold valuable at all? Is it REALLY because of it’s beauty? I tend to believe that it is because of it’s rarity. And eventually, provided that the network remains operational, Bitcoins will become a scarce commodity.
Worst case scenario (for me): a fat bitcoin wallet, useless, other than nostalgia.
It’s important to note that I wouldn’t buy Bitcoins with real world money, only mining them (which i think was profitible at some point but might have changed due to the drop in price)
Here’s the deal with bitcoins. It has to grow evenly with supply, demand, and network support.
Customers have got to enjoy using them. Business have to be able or better yet, want to take them, and network supports has got to have developed working code to build the bridge of the cycle.
I’m seeing is lack of development. Big speculation and lot of people talking with out using facts and statistics.
There is big opportunity to support bitcoin development. The currency is there now that transaction process have to be designed and easy for the masses to build. BitCoin does not have this. Remember economies jumping up all over gold mining is the US? It wasn’t just Gold Mining that Burst up. Shuvle, cart, railroads, and other business in these production fields prospered as well.
Supply and demand always has speculation… that’s humans way of getting a quick buck..
The major question is would we want this?
-Really we have to ask ourselves that question.
To me personally it answers to a lot of yes and a few no’s..
Security it the biggest issue and can be seen extremely from both sides with very valid points.
Science is starting to look at the universe as bubbles. Multiverses rather than universes… Naturally it seems plausible. Rise and Fall, boom to burst.
When we start to look at it as answers to world economics? This couldn’t have came at a better time. The old is dying. The new is arising.
We will have places of struggle but we are humans building and creating. Money is an art and science.
BAM!
This is a totally US-centric view. The relevance of America and its dollar is waning. In the growing parts of the world, Bitcoin is a very good fit for how people bank and spend. For example, is some parts of Africa and Southeast Asia, up to 80% of payments are by cellphone rather than by colored paper. The author needs to get out more often.
“First, people have made tremendous investment—emotional, financial, and technological—in dollars. Millions of vending machines and cash registers are designed to work with dollar-denominated coins and bills. People expect to see dollar-denominated prices in stores, and they have an intuitive sense for what’s a reasonable dollar-denominated price for a gallon of gas or a dozen eggs. They have dollar-denominated bank accounts, get dollar-denominated paychecks, and expect to retire on dollar-denominated pensions. It’s really hard to persuade Americans to use something else.”
This totally fails to look beyond the borders of the US or the time you live in. Currencies have changed many times before, and a Europe-wide change from national currencies to the Euro is a comprable change in very recent history. I’m not making that as an argument that bitcoin could be adopted as a national currency in the US, but it’s certainly a short sighted and incredible argument against it.
I have to disagree with your analysis because you almost entierly leave out the unique properties of Bitcoins. Sure if someone made some new currency similar to dollars which existed in coins and paper, who would care for it? In those cases, your point about network effect etc is perfectly valid.
Here is why I think Bitcoins has a future. When I lived in Holland I used to eletronic cash found on cards called Chipknip. I loved it. It was very practical to use since there was no fees for transactions, no PIN code etc. A downside of them was that unlike real cash I could not easily exchange it with friends. I could not check my current balance without going to a special machine. There is no way to get to the money on the card if you are abroad. Bitcoin solves a lot of these problems: you can keep them on a phone and check your balance at any time. You can exchange them with anybody you meet on the street, and in principle they work in any country. I think people will assign real value to bitcoins because of their unique properties. After all gold gets value for much the same reasons. If it was only for its industrial and decorative uses I do not think it would be that valuable.
Let us not forget shady businesses such as adult entertainment, drugs etc, which will find the currency very attractive. For them it will be too usefull to give up on. This will create a floor for how far down the value can fall.
Just came in via Business Insider link and thought that some updates on the facts would be in order. BTC wallets have a couple of advantages over national currencies not addressed to date in the commentary:
1. BTC cannot be frozen with hastily passed currency controls. Cyprus’ banking crisis is a perfect example of why this is important
2. BTC are a good alt currency to keep some of your emergency cash in. At a time when every major currency seems to be engaging in competitive devaluation, BTC will not be moving along with the herd over the monetary devaluation cliff.
At time of writing The BTC/USD rate is 139. It’s currently my best performing investment, with a cost measured in videocard time on a computer I leave on 24/7 anyway.
Numero de poliza seguro coche Aseguradoras de autos Simulador de seguro Seguro responsabilidad civil automotor precio Calcula tu seguro Companias de seguros de automoviles https://segurodeautoenusa.space/tyler-tx/ Como cotizar mi auto Cotizacion de aseguradoras de autos
Precio seguro automovil Cotizar seguro de vehiculo en linea Seguro contra todo riesgo vehiculos Cotizar poliza todo riesgo Tarjeta de seguro de auto https://segurodecarroenusa.store/marion-in/ Seguros contra todo riesgo para vehiculos precios Aseguranzas de autos baratas Cual es la aseguradora de coches mas barata Seguro barato Seguro de coche por dias barato
Como cotizar mi auto Seguro vehiculo Comparador seguros Seguro auto lider Seguros de autos precios Seguro automotriz mas barato Poliza de seguro vehicular Marcas de seguros para autos Comparar seguro auto https://segurodecarroenusa.store/bethany-ok/ Seguro coche a terceros Cotizador online Cotizacion de seguros de autos online Que seguro es mejor para auto
Calcular seguro todo riesgo Mejores aseguradoras Nombres de seguros de carros Valor seguro auto Seguro para carros contra todo riesgo Cotizar seguro de auto Nombres de seguros de autos Companias de seguros baratas https://seguroautomotrizenusa.space/cedar-park-tx/ Seguros para vehiculos Constancia para seguro automotriz Calcula tu seguro de coche Tabla de seguros de autos Seguro obligatorio coche
Asegurar mi auto online Comparador de seguros online Seguro car La caja de seguros automotor Cual es el seguro de coche mas barato Corredor de seguros https://segurodecarroenusa.store/slidell-la/ Comprar carros de seguros Seguros de carros economicos Autos de aseguradora baratos
Seguro basico para auto Cotizador automotriz Seguros de autos baratos Seguro de auto obligatorio Costo seguro vehicular Rastreador de seguros de coches baratos Cuanto vale un seguro de coche https://segurodecocheenusa.store/kirkwood-mo/ Calcular valor de seguro automotor Mejores aseguradoras Mejores coberturas seguro coche Mejor seguro para coche Valor de seguro de auto
Seguro coche 1 mes Cotizar seguro de vehiculo en linea Costo de seguro para auto Se puede asegurar un coche por meses Constancia seguro automotriz Como cotizar un seguro para auto Que seguro de coche es mejor https://segurodecarroenusa.store/rogers-mn/ Cotar seguro Seguros de automovil Seguro de auto obligatorio Responsabilidad civil seguro automotor Cual es la aseguradora de coches mas barata
Nombres de seguros de carros Seguro contra todo riesgo vehiculos Seguros coche online mas barato Liderar seguros automotor Seguro de carro precio Simular seguro de auto Cual es la aseguradora de coches mas barata Poliza seguro auto Buscar aseguranzas de autos https://segurodecocheenusa.store/bloomfield-mi/ Comparar seguro auto Seguro coche todo riesgo Costo de seguro vehicular Oferta seguro coche
Cotizador de seguros Cia de seguros Cotizador online Seguro cobertura total Presupuesto de seguro de coche Seguros online Seguros para autos economicos Seguro coche y moto Cuanto vale un seguro para carro https://segurodecocheenusa.store/sacramento-ca/ Seguros contra todo riesgo para vehiculos precios Comparador de seguros para autos
Comparador de seguros de coche Calcular seguro auto Poliza de seguro para vehiculos La caja seguros automotor sucursales Propuesta de seguro coche Cotar seguro Cuanto pago de seguro automotor Las empresas de seguros https://segurodeautoenusa.space/meridian-mi/ Seguros para vehiculos precios Tu auto seguro Tipos de seguro de automovil Seguro coche un mes Compra de seguros para autos
Autos de aseguradora Buscador seguros coche Precio de seguro vehicular todo riesgo Seguros de vehiculos Hacer seguro coche Companias de seguros baratas https://segurodeautoenusa.space/lewisburg-tn/ Seguros de autos Aseguranza carro Seguros por meses de coches Mejor comparador de seguros coche Automoviles seguros
Aseguradoras para autos Aseguradoras seguros Seguros de coche baratos online Las mejores aseguradoras de coches Ofertas de seguros Asegurar coche Sacar seguro de coche por internet Listado de cias de seguros La caja seguros cotizacion online https://seguroautomotrizenusa.space/ormond-beach-fl/ Hacer seguro de coche Cual es la mejor aseguradora para autos Que seguro es mejor para mi auto
La caja seguros autos Aseguradoras vehiculos Seguros online baratos Seguro de coche por dias barato Seguro vehiculo barato Comparar seguro auto Seguro automotor precios Calcular seguro coche online https://segurodeautoenusa.space/farmington-mo/ Seguros coche economicos Seguro de auto la caja Seguros de coche telefono Seguro de carro para estados unidos
Seguros usa Auto seguro Seguro auto online Precio de aseguranza full cover Tasar seguro auto https://segurodeautoenusa.space/lawrenceburg-tn/ Seguro automotriz mas barato Seguro todo riesgo
Contrato de seguro de automovil formato Poliza de seguro para carros Tipos de seguros para autos La caja seguros autos Seguros de carros baratos Seguro de auto Seguro barato Calcular precio de seguro de coche https://segurodecocheenusa.store/antioch-ca/ Autos de seguro Los mejores seguros para autos Comparativa seguro coche todo riesgo
Poliza contra terceros Seguro de moto online Que cubre el seguro automotriz Mejor comparador seguros coche Listado aseguradoras Cotizacion de seguros para vehiculos Buscador seguros coche Seguro todo riesgo Como funcionan los seguros de autos https://segurodeautoenusa.space/pinellas-park-fl/ Seguros vehiculos Agencia de seguros para autos Seguro de carro Buscar seguro coche barato
Seguro full para vehiculos Seguros para carro Mi auto seguro Cotizar seguro todo riesgo Agencia aseguradora Superintendencia de seguros automotor Comprar carros de seguros Seguros para coches clasicos Seguro auto economico La caja seguros automotor sucursales https://segurodecarroenusa.store/spearfish-sd/ Automoviles seguros Cotizar carros
Nombres de seguros de carros Cotizador de seguros para autos Simulador seguro automotriz Seguro de auto obligatorio Compra seguros Propuesta de seguro online Companias de seguros de coche Autos de aseguradora baratos Comparador de seguros Seguros automotriz https://segurodecarroenusa.store/shafter-ca/ Precio de seguro para carro Seguros baratos Seguro auto 0km Costo de seguro vehicular
Directorio aseguradoras El seguro de coche mas barato Como funciona un seguro de auto Cotizar seguro coche La caja aseguradora de autos Asegurar mi auto por internet Coste seguro coche Cotizar seguro para auto Costo de seguro para auto https://segurodecocheenusa.store/st.-michael-mn/ Que seguro es mejor para mi auto Vehiculos de seguros Seguro tercero completo que cubre Cotizar seguro de carro
Mejor seguro de auto Autos economicos de aseguradora Cuanto cuesta un seguro de coche para jovenes Auto seguro Poliza de auto Seguro de automotores Calcula tu seguro Mi seguro online Presupuesto seguro coche https://segurodeautoenusa.space/williamsburg-va/ Simulador de seguro de vehiculo Superintendencia de seguros automotor
Seguro basico para auto Seguros automaticos para autos Seguros de coche baratos online Nombres de aseguradoras Cotizar seguro auto la caja https://seguroautomotrizenusa.space/davenport-ia/ Calcular precio de seguro de coche Constancia para seguro automotriz Mejores coberturas seguro coche
Empresa de seguros de autos Comparar aseguradoras de coches Seguros internet Cotizar seguro todo riesgo Seguro de coche basico Aseguradoras economicas Nombres de seguros de carros Mediador de seguros Comprar seguro de auto Cuanto cuesta un seguro de coche a terceros https://seguroautomotrizenusa.space/huntington-beach-ca/ Quiero cotizar mi auto Cotizar seguro automotriz Como funciona el seguro del auto Que seguro de coche es mas barato
Aseguranzas de carros economicas Precios de seguros para autos Seguro de carro por un mes Requisitos para seguro de auto Seguro de responsabilidad civil automotor Seguro car https://seguroautomotrizenusa.space/mandeville-la/ Seguro automotor online Calcular valor seguro auto Aseguradoras para autos
Como funciona un seguro de auto Carro seguro Cotizador se seguros de autos Asegurar mi auto por internet Compara seguros Cotizacion automotores Precios de seguros de coche a todo riesgo Calculador de seguros de automovil Presupuestos para seguros Como conseguir un seguro de coche barato https://segurodecarroenusa.store/south-bend-in/ Cuanto sale un seguro de auto Seguros automoveis Seguros online baratos
Seguros para automoviles baratos Seguros por meses de coches Calcular seguro coche Seguro de auto economico Seguro de auto obligatorio https://seguroautomotrizenusa.space/grass-valley-ca/ Telefono de la caja seguros automotor Seguro obligatorio coche
Buscador seguros coche Companias de seguros de motos La caja de ahorro y seguros automotor Que cubre el seguro automotriz Seguro de la caja para autos https://segurodecocheenusa.store/raymore-mo/ Cuanto esta el seguro de un auto Correduria de seguros El seguro de coche mas barato Consultar seguro coche
Seguro contra robo de auto Seguros mensuales para coches Costo de seguro vehicular Ing seguros coche Comparador de seguros de automovil https://seguroautomotrizenusa.space/maitland-fl/ Autoseguros Seguros para motos cotizar online Buscador de seguros baratos Que es un seguro de auto
Seguro contra todo riesgo vehiculos precios Seguros coche online mas barato Simulador de seguro Cual es la mejor aseguradora para autos Que seguro es mejor para mi auto Concepto de compania de seguros Seguro de moto online Buscar seguros baratos Cotizar carros Compara seguros online https://segurodecarroenusa.store/paramount-ca/ Poliza seguro auto Cotizar seguro de auto en linea Vehiculo seguro Aseguradora online Contratar seguro de coche por internet
Como funciona el seguro del auto Contratar seguro de auto online Seguro para autos antiguos Auto seguro La caja seguros automotor Comparativa seguro coche todo riesgo Precio seguro de coche Directorio de aseguradoras https://segurodecocheenusa.store/plantation-fl/ Consulta de seguro automotor Seguros para automoviles baratos Agencia de seguros Presupuestos para seguros Comprar seguro de auto
Aprecio seguros telefono gratuito Nombres de aseguradoras Seguros de coche baratos Cuanto cuesta un seguro para Cotizar seguro automotor la caja Mejores seguros para autos https://segurodecarroenusa.store/sikeston-mo/ Seguro automotriz economico Calcular precio seguro Cuanto cuesta un seguro vehicular contra todo riesgo Buscador de seguros baratos
Responsabilidad civil seguro automotor La caja seguros cotizacion online Danos a terceros seguro coche Seguro coche y moto Seguro automotriz barato Seguros internet Seguros para autos economicos Seguros de coche por internet https://segurodecocheenusa.store/alpena-mi/ Carros de aseguradora Compara seguro automotriz
Rastreator seguros Las empresas de seguros Seguro de auto contra terceros Calcular precio de seguro de coche Seguros contra todo riesgo para vehiculos precios Como funcionan los seguros de autos Seguro auto por mes Precios de seguros Seguro de carro precio Correduria de seguros https://segurodecarroenusa.store/mundy-mi/ Mediador de seguros Seguros para auto Buscador de seguros de coche baratos Calcular seguro de coche barato
Seguro para automovil Companias de seguros de automoviles Seguro carro Comparador se seguros de coche Seguro mas economico para autos https://segurodecocheenusa.store/key-biscayne-fl/ Companias de seguros de automoviles Que seguro de coche es mejor Que son las entidades aseguradoras
Provincia seguros automotor Simulador seguro vehiculo Cuanto vale el seguro de un carro Precio seguro auto Cotizar seguro de vehiculo Aseguradoras economicas Poliza de seguro automotor Seguros baratos Buscador seguros automovil Cotizar seguro de auto https://segurodecocheenusa.store/hannibal-mo/ Cotizacion de seguros para vehiculos Cotizacion de seguros para autos online
Aseguradoras de autos en usa Comparador seguro coche online Comprar carros de seguros Seguro de carro barato Precios de polizas de seguros para vehiculos Costo de poliza de seguro para vehiculos Cuanto pago de seguro automotor Seguro de coche mensual Companias de seguros de coche https://segurodeautoenusa.space/austin-mn/ Buscador de seguros de coche online Asegurar auto Seguro contra robo auto Seguros todo riesgo para carros Seguro cobertura total
Seguro para terceros Cotar seguro Seguro barato El seguro de coche mas barato La caja seguros automotor sucursales Contratar seguro coche por internet Cotizar seguro automotor Mejor seguro para coche Seguro del carro Primero seguros autos https://segurodeautoenusa.space/terre-haute-in/ Agencia aseguradora Costo seguro automotor Cooperativa de seguro
Poliza de seguro automotor modelo Que es un seguro vehicular Presupuesto seguro automotor Hacer seguro coche online Comprar seguro carro Tipos de coberturas de seguros para autos Seguro de coche Aseguradoras de autos Calcular seguro de coche online Cotizar seguro coche https://segurodeautoenusa.space/avon-in/ Calcular seguro todo riesgo vehiculo Cotizar seguro automotriz online Calcular seguro coche