Aug 27, 2013
Bitcoin and its Value
Posted by Daniel Shafrir in categories: bitcoin, business, economics, finance
Originally posted as Part I of a four-part introductory series on Bitcoin on May 1, 2013 in the American Daily Herald. See the Bitcoin blog for all four articles.
The last couple of months proved a very exciting time for Bitcoin and its new owners, with values increasing from $30 to $260 within a month only to come crashing down in days. It went from virtual anonymity to virtual ubiquity and back again — the only constant being that it’s virtual. The dust has now settled and the talking heads have changed topic, and Bitcoin is slowly regaining strength. But does this mean we can finally, in a quiet and rational way, contemplate what this Bitcoin really is and where it has room to fit into our lives? The answer to that is no, because the concept of Bitcoin is so strange, unintuitive and foreign, no matter when you discuss it and with whom, it will lead to very divisive arguments. So I say now is as good a time as any to dive in and discuss it.
So what is Bitcoin, anyway?
Bitcoin is a virtual currency. It is a string of 1s and 0s, much like a lot of what we interact with in this day and age. It’s something new. It’s unique. It’s controversial. The detractors say it’s only useful for terrorists or drug lords who want to move money around undetected, which no doubt they do. But much like the Internet is so much more than pornography, so is Bitcoin so much more than drug money. E-mail liberated the letter from the postage stamp, Skype liberated telephone calls from crippling AT&T long-distance rates, Facebook liberated photos from the dusty photo album sitting on your shelf unopened. You can think of Bitcoin as what will liberate financial transactions from the grip of the financial institutions and the state.
