Bitcoin, Currency Of The Future?

With another bitcoin ATM becoming available, this one in Budapest, we look at this new currency and the issues surrounding it.

Listen to the gibbering freaks that inhabit the internet’s conspiracy rich corners for a moment or two and when they’re done telling you about aliens, 9/11 and who shot Kennedy they’ll almost certainly begin on a lengthy treatise on why capitalism is flawed and our currencies are all fake and valueless trapping us in a cycle of debt. They claim this is how the shadowy masters of our planet keep us under their collective thumbs, which probably ignores things like the mounted police, tazers and helicopter gunships.

Bitcoin was created in 2009 and addresses some of these rather exaggerated fears in that it is a currency with a unique value that is decentralized, fairly unregulated in most countries, and isn’t subject to the taxes and fees that are usually associated with money transfer or electronic payment methods. From online in-game purchases to a cappuccino in a coffee shop this new currency has spread from its internet origins to the streets of a city near you.

Where once you had to deal with online brokers and bitcoin dealers, these days you can simply purchase them from an ATM in the same way you’d withdraw some cash. The first of these machines was installed in a coffee shop in Vancouver back in October of last year, but since then a plethora have made appearances all over the world as part of smart strategies for marketing. The latest a bitcoin ATM in a coffee shop in Budapest, Hungary.

Octarine Labs who operate the machine in the Anker coffee shop offer the facility to exchange a minimum of 2000 HUF into bitcoins that can be transferred to the user’s mobile wallet by a QR-Scanner or may be printed for later use. The prices come from the reputable Bitstamp BTC Exchange, and it demonstrates that there is a market for the currency amongst those without electronic funds to start with, but do these people know what bitcoins actually are?

~ So What Are Bitcoins Anyway? ~

Bitcoins are an electronic currency that is based on the value of specifically created digital property that has all the characteristics of any other currency in that it has a singular unit value that fluctuates but retains an identity that is impossible to duplicate. Bank notes have series of numbers on them to differentiate them from one another, and in the same way bitcoin has identifying numbers, albeit it much, much longer ones.

These numbers that form the basis of the currency are created by a process known as mining in which hugely powerful computers are set to work on massively complex and difficult mathematical problems. When a machine, or most usually a series or pool of machines, completes one of this ridiculously tricky tasks it forms a unique location on the publically held register, and bitcoins are granted as reward for this. Since each location is impossible to replicate it has an inherent value.

Of course Bitcoin is not just the token of value but also the method of transfer since the public address requires a private key. This is in theory a more secure method of transacting in an electronic sphere, such as the internet, which is perhaps why it made casino gambling news when two resorts in Las Vegas decided to accept it as a payment method earlier this year. Of course not everyone is as welcoming of a rival.

Banks and financial institutions, governments and law enforcement agencies are all outraged that a currency beyond their control and influence exists at all, some countries have banned it entirely and others are likely to do so. The FBI has seized millions of dollars worth of bitcoins as part of criminal investigations highlighting the unfortunate truth that bitcoin as it stands at present has a bit of reputation for being less than innocent.

~ Bitcoin’s Criminal Connotations ~

Most currencies are involved in criminal acts. It’s awfully hard to buy drugs without some sort of currency, you can’t hire a hitman without wads of the stuff and as for bribing a foreign national to influence the outcome of a tender for which your multi-billion dollar corporation has applied requires so much as to involve whole suitcases of the stuff. Strangely, however, it is the far less frequently used bitcoin that receives far more the media’s attention.

The infamous Silk Road website, often cited as being the e-bay of drugs, offered a marketplace for goods and services of every variety but alas the media only concentrated on the hitmen for hire, the weapon’s sales and, of course, recreational drugs, then tarnished bitcoin as a facilitator of this hideous criminal activity because it was the payment method used, which frankly is a bit like blaming the dollar for Colombian drug lords because people buy coke with it on the weekends.

I’ve yet to see calls for a ban on the dollar despite it’s ubiquity in the world of global crime, well, not from anyone who didn’t also try to tell me the Queen of England is a lizard in a clever costume, but calls on bitcoin’s eradication continue daily. There is also some emphasis on the lack of security bitcoin supposedly suffers from, but with only one serious hack of the system per se (which was fixed instantly) the media focus on the hacking of individuals responsible for bitcoin exchanges, which isn’t the same thing.

The link between bitcoin and crime is very tenuous at best, no more criminal in nature than any other currency used in an illegal blackjack tournament, but the focus upon this and other negative aspects of the system by the corporate owned media is probably a very good indication that it’s a good thing. Anything a million bankers dislike can’t be all bad. Still only 5 years old it has a long way to go, but bitcoin is almost certainly a long term value retainer and thus probably is the currency of the future.