Tuesday, September 23, 2014
Bitcoins
http://www.eweek.com/security/bitcoin-poses-danger-to-british-economy-warns-bank-of-england.html.
Naturally, the article's contents say the opposite of what the title says. That's a different topic.
The evolution of digital currency is intriguing. Virtual economies in online communities are fun to watch, but a real economy based on digital currency interacting with the standard currencies is more interesting.
Of course, according to the article, there is no worry about Bitcoin harming any economies at its current scale.
You can't claim that it will never harm a standard economy though. Bitcoins aren't really any different from standard currencies: Physical money has no real value (it's just a store of value); Purchasing power of standard currencies is also completely dependent on people's confidence; The vast majority of money in this world is stored electronically with no representative physical object.
My first reaction to the idea of Bitcoin was incredulity that anyone would trust a currency based purely in digital form. But it's not really much different from our dollar.
Subscribe to:
Post Comments (Atom)
Amen!
ReplyDeleteThat is a good point. Trust in an arbitrary currency has its own challenges — when we are bankrupt, we can punt the problem downfield by printing more money — but at the same time, dishonest people can certainly take advantages of these systems and manipulate them to their benefit. I guess that is no different from a bank robber; they have just adjusted their tactics to the digital world. The medium might change, but the advantages and challenges seem to be remarkably similar.
ReplyDeleteI haven't been able to make much sense of digital money myself, but I hadn't yet thought about the money I currently trust. Paper! Whats the difference? It's really just putting your trust in someone else.
ReplyDelete