Bitcoin and Cryptocurrency - Forget money made of paper and metal. Bitcoin lives as a computer code and is created and traded electronically. Some legitimate concerns are that your entire account could be wiped out if it’s hacked or your computer is lost or destroyed.
There was one British man who threw away a hard drive with $9 million in bitcoins and lost it in a massive garbage dump. This also means that you can transfer money from one side of the globe to the other in a flash. No fees from banks. And because bitcoins are generated by an algorithm, there are no government central banks that can induce inflation and devalue the money. Bitcoin competes with global currency.
Bitcoin exchange Mt.Gox recently filed for bankruptcy protection in Japan after losing an estimated $400 million worth of customers’ bitcoins. Because of that, former bank regulator and current Boston University finance professor, Mark Williams calls Bitcoin a destructive — not disruptive — technology. “At this point, it’s a virtual experiment being tested in the real world, and we’re seeing lots of weaknesses,” he said Dealing with a purely electronic currency that’s barely regulated.
This also means that exchanges and Bitcoin storage centers like Mt. Gox can easily lose massive amounts of customers’ assets to software bugs or hackers. And the victims aren’t protected. What’s more, speculation about Bitcoin causes its value to sometimes rise or fall more than 10% on any given day.
Brandeis International Business School professor Catherine Mann doubts Bitcoin will have a future unless it becomes more stable. “The highly volatile price of Bitcoin undermines its use as a Currency- means of exchange,” she said. Bitcoin’s current shortcomings are natural. It’s an evolving industry led by tech entrepreneurs with zero financial experience. But it could spark a different approach to money, one of the most fundamental aspects of human interaction. And it’s already introduced other cryptocurrencies, such as Litecoin, Dogecoin and others.
That’s why in the grand scheme of things, identifying its creator is important — but not pivotal. Besides, the Bitcoin system is now run by computer developers who donate their time.
Former bank regulator and current Boston University finance professor Mark Williams calls Bitcoin a destructive — not disruptive — technology. Digital currency in and of itself is a virtual experiment being tested in the real world, with real people and we’re seeing lots of weaknesses. Electronic currency that is not maintained regularly also means that exchanges and Bitcoin storage centers like Mt.Gox can easily lose many of it’s customers’ assets to software bugs or hackers.
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Freedomain Radio is 100% funded by viewers like you. Please support the show by signing up for a monthly subscription or making a one time donation at: freedomainradio.com/donateAndré François McKenzie