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.
Video: Bitcoin ATM 2
Todd Bethell gives an inside look into the much anticipated global Bitcoin ATM Machine.
In the video, Todd says:
We’re looking at about 150 to 200 ATMs within six months. That will be globally, not just in North America.
WSJ Video - Bitcoin Commentary By Chuck Jaffe
Chuck Jaffe, senior columnist for Marketwatch, goes on camera to reiterate all the talking points that are followed by journalists wishing to steer their readers away from Bitcoin. To determine whether or not Jaffe hit them all, here’s the scorecard:
Somewhere, Jaffe’s notes must have gotten mixed up because the term “ponzi” was not used whatsoever and there was no alarm raised over electricity being wasted from mining Bitcoin.
On a more serious note — either Mr. Jaffe cannot grasp the concept of how a decentralized currency requires no bank intermediary or he purposely confuses things because repeatedly mentioned were “online banks”.
Online banks are generally used by those who are non-technical because to use Bitcoin the way it was designed where the coins are kept in a wallet locally is something that requires secure computing practices to be followed and for reliable backups to be maintained.
Thus Mr. Jaffe’s later point about bitcoin not being ready as an investment mechanism for the “average person” is useful commentary at the present time.
Multi-factor authentication (e.g., Mt. Gox’s yubikey), for example, reduces significantly any security risks with online bank-like ewallet services and is a dead-simple concept for most who are technical. Our banking system has not yet forced us as consumers to adopt true multi-factor authentication and as a result the “average person” will have a learning curve to climb when first using an online ewallet with these security mechanisms.
Of course, during this commentary Bitcoin’s attributes were not touted. These include:
The Bitcoin ecosystem is constantly evolving and the shortcomings some see with the currency are being addressed. The hybrid wallet model used for BitcoinJS / Webcoin, for instance, will likely be the innovation that boosts bitcoin use by mobile users. Some exchanges are introducing margin trading and shorting — mechanisms that will add liquidity and will help to lower Bitcoin’s exchange rate volatility.
These are examples of improvements that are in Bitcoin’s near future. If demand for bitcoins rise as a result, the currency having a limited issuance means that most of the supply would have to come from those willing to part with their holdings — something that may not happen unless the exchnage rate reaches a significantly higher level.
Those choosing to retain their bitcoin holdings are likely those who are seeing the future prospects for Bitcoin rather than succumbing to Jaffe’s rear-view-mirror analysis.
Jaffe had also published commentary in Marketwatch recently.
Michael Hendrix, @mndrix, describes similarities and differences between the properties of gold and the properties of bitcoins. Excerpts:
Bitcoin has nearly every strength that gold does. Bitcoins are fungible. They’re easily recognizable (by Bitcoin software) and durable (with reasonable data backups). The supply is almost perfectly predictable. Bitcoin has no industrial or jewelry uses so demand is less affected by economic conditions. It possesses almost arbitrary value density.
The Bitcoin network adapts rapidly to maintain predictable supply in the face of surprise mining advances.
If Bitcoin were gold, we’d still be in the early stone age carrying gold flecks in a leather pouch. There aren’t any assay offices, there aren’t any minted coins, there aren’t massive mining operations or liquid futures markets. There are still doubters claiming they can one day turn lead into gold. With real gold, those issues were settled long ago.
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.
If you take the proper steps [Bitcoin] is the most portable money ever. For that element of safety and liquidity therefore I think everyone should hold some BitCoins, perhaps at least 0.1% of their net worth, in their portfolio.
I would take a bet for BitCoins to hit $7.50 by June or July at around a 50-70% probability.
If you want to buy any Run To Gold products using BitCoins […] we can make a deal with a substantial discount.
In October, Timothy B. Lee (@BinaryBits) summed up Bitcoin with the statement “It’ll be difficult to pull out of that kind of tailspin”. Today though he writes about “Bitcoin’s Comeback”. Excerpts:
At a minimum it looks like the currency will still be around in 2012.
The longer Bitcoins continue to exist, the more confidence people will have in its continued existence.
There’s no Bitcoin Inc. to compete directly with Western Union, but [those investing in] Bitcoins can be thought of as shareholders in a decentralized Western Union alternative.