Posted on 12/02/2013 8:41:57 AM PST by Star Traveler
MILTON FRIEDMAN famously called for the abolition of the Federal Reserve, which he thought ought to be replaced by an automated system which would increase the money supply at a steady, predetermined rate. This, he argued, would put a lid on inflation, setting spending and investment decisions on a surer footing. Now, Friedman's dream has finally been realised—albeit not by a real-world central bank.
Bitcoin, the world's "first decentralised digital currency", was devised in 2009 by programmer Satoshi Nakomoto (thought not to be his—or her—real name). Unlike other virtual monies—like Second Life's Linden dollars, for instance—it does not have a central clearing house run by a single company or organisation. Nor is it pegged to any real-world currency, which it resembles in that it can be used to purchase real-world goods and services, not just virtual ones. However, rather than rely on a central monetary authority to monitor, verify and approve transactions, and manage the money supply, Bitcoin is underwritten by a peer-to-peer network akin to file-sharing services like BitTorrent.
The easiest way to store Bitcoins is to sign up to an online wallet service through which all transactions are carried out. This, of course, means trusting the provider of that service not to cheat, or go out of business, taking clients' savings with it. Warier users can install a personal digital wallet on their own computers. They must then, however, keep it safe from viruses or physical damage. If a laptop went up in smoke, so would the virtual coins stored on its hard drive. (Keeping back-up copies would do the trick.)
All transactions are secured using public-key encryption, a technique which underpins many online dealings.
(Excerpt) Read more at economist.com ...
If I want to buy Bitcoins, what do I pay for them with?
Think I like silver coins better, thanks.
Well ... I did just see that you can use PayPal ... :-)
https://en.bitcoin.it/wiki/Buying_Bitcoins_(the_newbie_version)
Silicon Valley catches Bitcoin fever
http://www.freerepublic.com/focus/f-news/3097361/posts
A Prediction: Bitcoin Is Doomed to Fail
http://www.freerepublic.com/focus/f-news/3097365/posts
I’m curious about the debit side of bitcoin...
If I can own bitcoins, can I not borrow them as well? That is, take out a loan in bitcoin? And, if that is the case, say I “borrowed” 1 bitcoin when it was valued at $100, way back when. Now, today with it over $1000.... do I owe $1000?
If you “borrow” TWO BITCOINS from someone (who is willing to do this with you) — then all you have to do is pay him back TWO BITCOINS at the agreed-upon time (with perhaps some minimal interest). What the value of the Bitcoin is, at various times is IRRELEVANT to the transaction being carried out.
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In short, yes. If you don’t have any Bitcoin in your account, then you’ll need to convert dollars on the spot. That’s why in the analogue world the Euro was created to reduce currency discrepancies among European countries.
But this is why futures contracts exist. At the time you take the Bitcoin loan you also enter a contract to buy Bitcoin in the future for x number of dollars. That way you’re protected from currency valuation changes.
http://monetaryrealism.com/bitcoin-is-a-scam/
From the Independent Living Bullion:
"The number of merchants who accept Bitcoin is growing, but mainstream acceptance may prove unattainable. The wild volatility in prices isn't helping adoption. Merchants aren't generally prone to speculating, and they are fearful that major losses could result on Bitcoin holdings before they'd be able to convert the Bitcoins back into whichever fiat currency they need to operate their business. Bitcoins cannot serve as a reliable store of value. Gold (and silver) were prized intrinsically for their beauty and utility before people began minting coins and exchanging them as money. Owners can be certain precious metals values will never be zero. Not so for Bitcoins. No one values the electronic zeroes and ones that comprise each unit. Without confidence that someone else will accept Bitcoins in exchange for value, they are worthless. To avoid major devaluation and obsolescence, Bitcoins must also weather an assault from competing crypto-currencies. There are several competitors already – including Litecoin, Peercoin, and Namecoin – with more on the way. Bitcoin has the advantage of being first in the market, but any of the alternatives may prove to be the better "mousetrap." And, again, should Bitcoins lose the race to win confidence and wide acceptance, their intrinsic value is zero."
Here’s something from Wired Magazine that gives you some background and history on how it started. However, it’s not a current article as it’s two years old.
The Rise and Fall of Bitcoin
http://www.wired.com/magazine/2011/11/mf_bitcoin/all/
“There are several competitors already – including Litecoin, Peercoin, and Namecoin – with more on the way.”
That reminds me of the “.com” bubble. Too many players on the field, only 1 or 2 of each category able to survive the collapse.
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