BitCoin has been getting a lot of buzz in the media recently. The people who love BitCoin are proclaiming it to be the currency of the future and love to point out that the US Dollar has dropped 90% against the BitCoin in recent months. BitCoin has gained much media buzz due to the notable support of the Winklevoss brothers who are famous of suing Mark Zuckerberg for allegedly stealing their idea for “The Facebook” (which they called “Harvard Connection” and then “ConnectU”)
As of this writing, BitCoins are trading at about $126 USD for 1 BTC. Indeed the value of BitCoins have risen dramatically, but one could argue their value has risen from “nothing” to “something”.
The creators of BitCoin have setup a Wiki, where they are proud to address any security weaknesses in their system, claiming that BitCoin is the most secure and reliable form of money available. There are 2.1 Quadrillion BitCoins, and that’s all there are or ever will be. It is mathematically impossible to print more BitCoins because their value is tied to mathematical concepts. The US Federal Reserve is allowed to print US Dollars at will and distribute those dollars wherever they choose (where does all this free money go and why don’t I get some?)
It seems to me that the general public is naive to what I see as a blaring, ridiculous, vulnerability to the whole BitCoin system.
The simple fact is that, although there might be only 2.1Quadrillion BitCoins out there, it is way too easy to simply create an entirely new currency derived from the BitCoin source code. Since BitCoin is open source, it’s code is online and can be downloaded by anyone who knows how to work a compiler. I could basically just take that source, change a few lines of code, and have a completely new currency of my own. Now, granted, my new currency wouldn’t be BitCoins. I wouldn’t be able to print BitCoins at will, but I’d be willing to sell you a majority piece of the future world economy for say…. the low, low price of $20 million USD… a bargain!
The value of this currency, like BitCoin’s currency is only as valuable as the value assigned to it by the people who trade it. Right now, the people who trade BitCoins are socially inept nerds (not unlike myself), drug dealers, addicts, gangsters, and 3rd-world, oppressed countries lacking stable currencies of their own.
For the currency to gain real legitimacy, it needs the support of the governments, blue-bloods, and fortune 1000 companies. So the likely digital currency to rise to power is… well… likely to be something that those interested parties can control.
The US Government or interested parties could, therefore, take BitCoin, and modify it into something new… or just create a new digital currency inspired by BitCoin… and *poof*… bit coin is irrelevant, and the rich speculators who have succeeded in inflating the value of BitCoin so far will realize their own naivety and completely bail out of the system. The result will be a virtual, digital, currency that is worth a tiny fraction of its current value.
Which BitCoin do you think would win this battle?… The one endorsed by Target, Walmart, the blue-bloods, and the governments of the world?… or the one endorsed by the gun-runners, drug dealers, and illegal casino operators?
“Thanks for all the free source code, guys! We’ll take it from here!”
There’s only so much gold in the world. Granted the value of gold is arbitrarily assigned, but the reason gold is considered valuable is #1, because it is incredibly rare and very little new gold is found around the world every year, making it stable… and #2 this rarity, combined with its tangibility, makes it worthy of demand.
However, if I can change a few lines of code and create a whole new currency parallel to BitCoin, essentially creating a new “gold”… a whole new commodity with the same properties of BitCoin… who is to say that BitCoin should be assigned any value at all. The true fate of this currency can go only one direction, DOWN. The likely outcome for BitCoin is that of a tiny bubble, that will quickly pop. Governments that participate in the world economy do not want BitCoin. If it is replaced, it will likely be replaced by those governments that do not wish to give up their power…. the ones that already own the guns, not the rebels who need to buy them on the black market.
BitCoin has seen a surge in value right now, but it will quickly become old news. I’ll be very surprised if it isn’t traded for 1/1000th its current value in a few years.
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“Some studies show the people who arising from the
financially weaker strata are most gamble. ‘ interview with Real Colorado’s Lorne Rush – US Soccer Players.”