Have you ever heard of Bitcoins? PPcoins? Novacoins? If not, this may be the way of the future when it comes to paying for products or services. Bitcoins came into existence in 2009 by a person (or persons) who goes by the Alias, Satoshi Nakamoto.
No one knows if this is one person or a team of computer geniuses. Either way, they have constructed the most hands-off way to pay for everyday things. Before you get all excited, the downsides outweigh the good by a long shot. The red tape needed to be cut before this could ever become a viable currency is a never ending road.
Bitcoins are also known as “Cryptocurrency” or digital currency. It’s a peer-to-peer (P2P) currency that is “mined” through the use of multiple computer processors. Everyday people, like you and me, solve complex mathematical problems and with every bitcoin mined, 25-50 bitcoins are awarded. The average time for awarded bitcoins is roughly every ten minutes. They can be sold among each other or purchased with paper money. The value of bitcoins was in the upper hundreds in 2013, however this didn’t last long.
Obviously, the government finds out everything and they realized the popularity of bitcoins was becoming too big. After they got the word and spoke publicly about them, the value of bitcoins decreased by 17%. Along with government interference, there are a number of reasons why bitcoins may never be a viable or sustainable choice of currency.
Since 2008, the world has been in a recession. Cut backs in spending, lower ability to save, and increase in job loss caused the recession. If one country is effected by a decrease in buying and selling, it causes a domino effect among everyone.
The bitcoin could benefit small businesses like mom and pop type stores by avoiding credit card fees for transactions. Big businesses, such as the credit card companies, could suffer from the decline in customers since the majority of businesses in the U.S. are small businesses. We all think big businesses are greedy as it is but we need them to help circulate money. If money is not being circulated there’s less to trickle down. The money stays in the big businesses or the banks to pay for debts incurred because smaller businesses are not investing in credit card transaction fees.
Bitcoins are created in a way to devalue the dollar. With the constant fluctuation of bitcoin value, the online world would have to keep up with their values on products and services to match the bitcoin. In the end it would be too much work.
We all dream of working from home and not having to go to work every morning. Imagine sitting at a multi-processor computer solving complicated mathematical equations all day in order to earn bitcoins…does it sound appealing? To most, it may sound like a nightmare. Not everyone is a mathematical genius. Having to work so hard for a “dollar” that isn’t even tangible seems like a waste of time to many. The amount of money needed to invest in all processors may also not seem financially feasible for most especially in an economic recession.
As for exchanging or using bitcoins, since it is such a new concept of currency, not many places that we shop at regularly actually accept them. For example, there is only ONE pizza place in New York City that accepts bitcoins as payment. New York City has a reputation for trying to be as up-to-date as possible and if only one store is accepting bitcoins, why has no one else? Fear of no return on their investment?
Public records or logs are actively monitored by a team of bitcoin miners. These are known as blockchains. The blockchains keep track of who spends what and how much is left. Unlike bank accounts used in banks where our name, social security number, and address are used to put a face to the purchase and locate us, Bitcoin usage is anonymous. The only ID they use is the users digital wallet identification number. This is prime real estate for drug sales and other illegal uses. No names, no addresses, only a number attached to a wallet that could be depleted before they are even found.
The lack of control the government would have over bitcoins would involve them developing an all new set of guidelines to accommodate the use of bitcoins and its users. Although it would be a dream come true if the government would stay out of some things, but having NO control over this new form of currency could be disastrous. Our taxes are used to fund state and government-ran agencies and schools. Limited taxation could result in less funding, and a cutback in public services. Governments would have to set up separate types of retrieval and spending systems to ensure the proper amount is deducted from the value of a bitcoin and disbursed.
Another major concern is double spending. Think of bitcoin fraud like this: when you have that report to write or PowerPoint presentation to finish and you needed specific images, we copy and paste those images we need while crediting the website we retrieved them from. Now, imagine doing the same thing with a bitcoin code. We copy and paste the code over and over to make purchases. Imagine how much of a mess that would be. Over the long-term, bitcoins are not a sustainable source of currency because of the copy/paste factor combined with the lack of tracking and government regulation. If someone puts a bitcoin towards illegal use, someone else receives that coin and uses it legally, the last person could be subject to fraudulent charges. They could plead not guilty, but imagine trying to untangle that web of digital currency and digital wallet logs. What a nightmare!
Bitcoins will do away with that torn up leather wallet you keep in the back pocket of your favorite jeans that now have a faded square imprint on it. Instead, there are two ways to have a digital wallet: On your computer or cloud based. This would be called your virtual bank account.
There is no insurance provided on your account by the FDIC and it is up to you to ensure it is safe. Unfortunately, the world is full of hackers and scam artists who are able to infiltrate your personal information and home computers, or worse, business servers. If your virtual bank account is located on your personal computer or a cloud-based account and it is intruded, say goodbye to all your money. Unless you stay on top of monitoring your computer and your cloud, anything is possible. Pro-bitcoin users say the likelihood of your computer or cloud account being targeted is slim to none, but anything is possible.
The creator of bitcoin estimates by the year 2140 the bitcoins cap will hit 21 million. Considering the population outweighs the number of bitcoins available, which is less than the amount of money needed, how is there going to be enough to go around? Yes, the value does vary among each bitcoin and could create a fluctuation in the digital bank account, but why go through all that trouble?
We all know that one person or many people who are not technologically advanced. Lack of computer skills could put a major hindrance of an entire group of people having the ability to use bitcoin properly. Mostly older generations are just starting to come around to the technology era. They haven’t been gradually exposed to computer use of any kind.
Recent generations use computers and all it has to offer not only in schools but also at home. All that exposure allows them to become aware of different types of programs, shortcuts, applications, and computer terminology. Even if you are familiar with the workings of a computer, what if you have zero interest in cryptography and/or math? People already work hard for their money, no one is going to want to sit there and calculate their bitcoin value and deduct it to make purchases. It’s much more logical to receive a check, look at your balance and do what you need to do.
Think of being at your computer, you’re right in the middle of playing a game, writing a paper, or researching data for a big presentation for tomorrow…and the power goes out. Now take that thought and put it into a widespread outage and your money is involved. Scary, right? The unknown of whether your financial stability can withstand such a scenario is an ever-present reality.
Now, after that outage and you realize all your money is still there, phew! I bet you would want to get out of bitcoin usage as quickly as possible to avoid having that type of fear again. You and everyone else with the same thought is going to want to do the same thing. The conversion of bitcoins back to paper money would be overflowing,. Could our banks and government keep up with that? Probably not.
The technological advances that have been invented has surpassed our wildest dreams. The excitement we get with our phones, Internet, and tablets is a gratifying experience. Integrating how to cater to each and every age group and interest is fantastic. Nevertheless, bitcoins only cater to the tech-savvy individuals.
The problems related to variable fluctuation in bitcoin value, possible increase in illegal activity, and limited government regulation are just some of the ingredients which could create a bitcoin recipe for disaster.