Bitcoin. If you haven’t heard of it, you will. Bitcoin is quite possibly one of the most important concepts of our time. Bitcoin is a decentralized digital currency. That means that it’s not tied to a government or any other political entity. Bitcoins are not minted. They are intangible. Because of this, those who oppose the use of Bitcoins would suggest that they are a fiat currency. A fiat currency is one whose value is arbitrarily determined by those who created it. (Fiat is Latin for “it shall be”) But unlike the U.S. dollar, whose value is determined by the government that prints it, the value of Bitcoins relies entirely upon individuals.
Joel Bowman, one of the inaugural Bitcoin miners, says this of Bitcoin:
“It relies solely on subjective value, which is to say, value assigned to it by voluntary individuals who, after weighing up its characteristics, determine its utility as a medium of exchange in a give context. It is the very opposite of value by decree, by coercion, by violence. It is value by voluntary market determination.”
The conversations around Bitcoin are varied and complex. There are those who consider Bitcoin to be analogous to the Segway, which was supposed to revolutionize transportation. They believe Bitcoin is a trend that will fade away before it ever has the ability to make a significant impact.
On the other side, there are those who believe Bitcoin is more analogous to the telephone. Initially, the telephone was rejected by the majority of the population. After all, who would want one when there were only 109 of them in North America? The same was true of home computers at their inception. In 1943, Thomas Watson, Chairman of IBM said “I think there is a world market for maybe five computers.” And think of the resistance to adopt an automobile over the horse-drawn carriage! Every new idea is rejected by the masses. Wide-spread acceptance relies on the zealous passion of early adopters. And those early adopters are richly rewarded for investing while the concept is in its infancy.
The enticing, and somewhat daunting prospect of Bitcoin’s future is that it will either be the most wildly successful concept of our time, or it will flop entirely. There is no middle ground. From the time of its inception just 5 years ago, the value of Bitcoins has risen from $0 to more than $1,200. Like any new innovation, its value is volatile and unclear, as is its usefulness. Bitcoin could fail tomorrow. Or it could fulfill on the promise of a currency that operates independent of politics or governments. If that is the case, Bitcoin’s value with soar to multiple times its current value.
If you are thinking of waiting for a few months to decide where you stand on Bitcoin, you may want to reconsider. I believe now is the time to do your due diligence and learn everything you can about Bitcoin as soon as possible. In the past 24 hours, the value of Bitcoins went up another $100. Like most things timing is crucial and if you don’t buy into the concept of an online currency or alternative online payment platform, this conversation is irrelevant. But if you think that online currency has a viable future, you are going to want to take a hard look at Bitcoin today.
This article gives an overview of Bitcoin’s short history.
Visit Global Bitcoin Investors to learn more about one of my most recent ventures in bitcoin.
