Saturday, April 6, 2013

Bitcoin: Virtual money

A lot of attention recently has been directed at a phenomenon known as Bitcoin.  I've been aware of it for a month or so, though I really had no idea what it was about other than deducing that it is some form of electronic money.  My "it's just a fad" radar registered it as something to avoid investing time in originally, but I've come to change my mind.  What did it for me was listening to this interview with a Bitcoin principle and Tom Woods, a favorite historian of mine.  And this morning I read a very informative and interesting analysis of the Bitcoin concept by Nicolay Gertchev writing for the Mises Institute.  He gets into the nitty-gritty details of the idea, and while he seems to admire and like it, he points out several issues that make Bitcoin ultimately less satisfactory than gold or silver as a currency.
Here's an excerpt:
In conclusion, virtual monies, of which bitcoins seem to be the most perfected specimen up to date, do not allow acting individuals to manage the uncertainty of the future as well as material monies do.
You may not agree with his conclusion.  Overall, this is a fascinating idea with a fascinating story; I definitely recommend both the interview and the article.  The popularity of Bitcoin is growing exponentially, so you'll definitely be hearing more about in the very near future.