I had heard of Bitcoins probably 2 years ago. I read up about it and it’s advantages while the US economy tanked and the big banks received bail outs instead of the people who we’re losing their homes. I thought it sounded like a pretty good idea at the time a digital currency not controlled by anyone or any one government. I thought about using it myself. I guess I was too busy making ends meet to really look into it. If only I had known how much and how quickly it’s price would soar. As I write this today the price to exchange a US Dollar for 1 Bitcoin is 93:1. Not 93 Bitcoins for 1 US Dollar but the reverse. It really does cost over $90 to purchase a single bit coin!
Other titles I thought about using for this article include
- “Bitcoins Become Black Swan Reality”
- “Bitcoins: I Don’t Understand Money Anymore!”
- “Bitcoins Now and Then; The Story Of The $930,000 Pizza”
Interesting History: This makes ” Laszlo Hanyecz’s 10,000 Bitcoin Pizza” now an unprecedented $930,000 Pizza. Pretty good profit on 2 large cheese pizzas with toppings. This amount only works retroactively of course. Let’s hope the English gentlemen who traded an internet order of pizza saved those Bitcoins for a rainy day. Someone tell him today it’s raining!
In case you are wondering how much 10,000 Bitcoins we’re back then it seems to be about $41.
“10,000… Thats quite a bit.. you could sell those on https://www.bitcoinmarket.com/ for $41USD right now..
good luck on getting your free pizza.“ Source:https://bitcointalk.org/index.php?topic=137.msg1195#msg1195
Those are just cheesy facts right? (God sorry for that awful pun but I just had to) It’s not like a pizza bought on May 22nd, 2010 in Jacksonville Florida would have ANY bearing or relation to a real world crisis 3 years later… Events say; like the fall of Cyprus right? Right? I have a suggestion; sit down for this next part.
Recent events suggest that many of the people who are using Bitcoin don’t want a re-iteration of these old models. Much of the new interest in Bitcoin is coming from places like Cyprus whose desperate proposals for economic reform threaten to plunder the savings of its people.
Take what happened on 19 March, for example. In its bargaining for a 10 billion Euro bailout from its European lenders, the Cypriot government instituted a bank holiday (which did not end until 28 March) as it considered economic reforms that would impose severe levies on many bank deposits. As the situation became more chaotic, Cypriots who found themselves suddenly cut off from their savings accounts began downloading Bitcoin iphone apps.
That day, downloads of Bitcoin Gold, an application that tracks the exchange rate of Bitcoin, soared, going from the 1171st most popular finance-related download to 104th. Without access to their money, it’s unlikely that many Cypriots were able to buy Bitcoins at that time. But interest in the currency peaked in other countries as well. Spain, which has kept a close eye on the developments in Cyprus showed a similar spike on 17 March and downloads in the U.S. jumped three days later, indicating that when government currencies fray, Bitcoin begins to look a little more like a safe haven and a little less like a crazy techno-utopian experiment. Source: Bitcoin Hits $1 Billion
To put this into some kind of real world perspective I have to point out that market crashes are not impossible, especially when viewed globally instead of locally. Even in the US Bank runs have happened in the past. What’s different this time around is what people are seeking out as their alternative. Normally it would have been Gold and Silver. Traditionally precious metals have been the place to hoard ones money during an economic/regime/government/way of life meltdown. So why would anyone turn to Bitcoins? Is it just a new tech-fad, some new age idea that caught fire? Could there be some advantages? Consider this:
- Bitcoins are a weird mix of public and private. Making it hard to attach Wallet A with real Person B from an outside (investigator) perspective. This can be a good thing when your country is collapsing and bankers are levying a 10-40% tax on savings.
- You don’t have to carry a Bitcoin on you personally after all it is a digital currency. So it’s harder to steal or confiscate. History note: As Americans and other tourists fled Cuba while Fidel Castro’s revolution took over the country armed guards would search citizens and their luggage before being allowed to leave the country. All watches, rings, jewelry, gold, silver, diamonds and anything of obvious value we’re confiscated. If a similiar event happens would you rather be carrying 100 ounces of silver or have those Bitcoins held in an anonymous digital wallet only you could access?
- Many online shops now accept Bitcoins making Bitcoins easier to spend than Gold. Real world shops carry them too, even a restaurant in Orlando FL is will accept Bitcoins.
- It’s easier to transfer to your bank account than physical gold. You can exchange and deposit Bitcoins directly into your bank account in less than 24 hours (source: https://bitpay.com/ and https://mtgox.com/)
So how long until it’s the world Standard Currency and we’re all trading in Bitcoins?
It took the devastation of Europe and the victory of Allied forces in World War 2 for American Dollars to become the unofficial world currency. People we’re willing to trust in American Currency because they we’re willing to invest (aka bet) on Americas future. Aside from Pearl Harbor American soil remained largely untouched. It’s factories stayed up and running and didn’t have to be rebuilt from bombings. Fields could be plowed and harvested without first being de-mined.
Money always moves someplace “safer”, especially when people have reason to panic. When the markets are up and the future is shining so bright that everyone thinks the sky is the limit, people are not as concerned with the safety of their current methods. After all it must be working right? But is the future shining on American and European markets today? Some say the crash isn’t over yet. It’s times like these that money will go where investors feel most assured. Bitcoins now appear to be a mixture of safety, liquidity and even growth.
But wait you say, what about the merchants? what about Amazon and Apple? What about my local Grocery store? When can I spend my Bitcoins there!? Saving and investing in Bitcoins is great and exchanging those Bitcoins to Dollars is well and good; but when can I spend it locally and directly?
Just give it a little more time,
David Bud Leiser
Want to know more about Bitcoin? I recommend Wired magazines “The Rise and Fall of Bitcoin”
Did you like this article? Please reply below. You can create an account or simply login with Facebook.