In terms of pure monetary economics it has considerable advantages over state fiat money, many characteristics of gold – and potentially even some unique advantages. The concepts and ideas behind Bitcoin cannot easily be dismissed.
[Fiat money]’s Achilles heel is the very elasticity of the money supply that today’s mainstream doesn’t tire of touting as its main advantage: ‘No dreadful deflation and we can always stimulate the economy!’
Just like gold, Bitcoin is international money. It can facilitate transactions between two parties in entirely different political jurisdictions.
Those in charge of the present paper money franchise are already boxed in a corner. They do not want to allow a painful cleansing of the accumulated dislocations, which means they have to keep creating ever more money. The endgame is fast approaching.
You could take [Bitcoin’s price collapse] as a sign that Bitcoin has failed. […] In 2002/2003, so many people thought the Internet was “over” as an investment opportunity. And they were wrong.
It seems to me and my colleagues at USV that an alternative currency with roots in peer to peer networks and based on an algorithm that is transparent to everyone is an idea whose time has come.
Bitcoin continues a steady march with innovations and improvements throughout its ecosystem. While Fred and most of the VC industry have not yet made any investments specific to Bitcoin, positive developments are continuously occurring. Consider today the many variations in the ways bitcoins are stored including new hybrid wallets (e.g., Strongcoin), offline wallets (including BitAddress.org and Casascius physical Bitcoins), and mobile wallets (e.g., the latest entry, BitcoinSpinner) — none of which existed just a few months ago. Whether bootstrapped or launched with investment partners great offerings such as BlockChain.info and Bitcoinica are continuously arriving.
While the Mexican peso and the Polish zloty had a good year, there was one currency that outperformed them all — by an order of magnitude. That’s no secret to those reading this, but it will be to reader’s of Sober Look (@SoberLook), a financial blog with a global audience Excerpts:
“It’s not issued by a country, nor is it a precious metal or a rare-earth. Bitcoin is an electronic currency that can be exchanged for some goods and services, particularly online. The currency is not controlled by a central bank.”
“For more background on Bitcoins see this story from Wired Magazine (Wikipedia does a terrible job describing this process).”
“Therein lies the flaw of the Bitcoin concept: transaction anonymity attracts illicit activity.”
“So why has the currency tripled this year? A number of rumors have been circulating in the online forums trying to explain the rally.”
“Nevertheless Bitcoin is the 2012 winner for the best performing currency against the dollar.”
GoWest (@GoWestBTC), blogging on TheBitcoinTrader.com, shows some metrics describing where Bitcoin shined in 2012. Excerpts:
“The current market cap is actually at a peak for 2012, exceeding the spike in August. This can be attributed to the fact that tens of thousands of Bitcoins have been introduced into the economy since August.”
“These have shown steady growth over the past year: The number of items listed at Bitmit (an auction site that operates in Bitcoin), the number of users at Ogrr (an MMORPG marketplace), and the number of views of the ‘What is Bitcoin’ YouTube video.”
“Bitcoin’s top poker site, SealswithClubs, is gaining new users on a daily basis, with attendance at the tables on the rise.”
“The Bitcoin discussion on the TwoPlusTwo forums, the most popular poker discussion forum on the ‘net, has 3,000 posts and 165,000 views!”
“All-in-all, a very impressive year for Bitcoin. Here’s to an even stronger performance in 2013!”