Apparently there is no central authority that manages bitcoins. This is concerning for obvious reasons. The interviewer mentioned that this could be an elaborate ponzi scheme, which is possible if there is no reputable body to manage this currency. I'm also curious as to how these even work as a currency, as I definitely haven't seen any stores that accept these! Sounds like the idea will eventually be a bust.
The obvious point of the existence of bitcoins is to make businesses less dependent on the government/banking monopoly. Though it is a system that relies on trust is never going to end well as there are always those that are going to get greedy. Bitcoins has not audit process and no way of keeping anyone honest. It also is inherently deflationary as the supply can always be divided but is also designed to appreciate.
Seeing as Bitcoins are labeled as the currency of the future I was interested to see if they actually have any value behind them. I found that like other modern forms of currency, Bitcoins are not a genuine store of value. Bitcoins are nothing more than digits or numbers that reside on the hard drives of those who are using it as a unit of exchange. The power of the Bitcoin is as vulnerable as our current money currency in that its purchasing power can be wiped out by a crash of your hard drive or a loss in confidence in its purchasing power. What I found the most alarming about Bitcoins is that there is no central authority to monitor the exchange of this internet currency. Therefore, the owner of these algorithms could fold spontaneously and take all the money people invested in the currency. Sounds like a large ponzi scheme to me.
Apparently there is no central authority that manages bitcoins. This is concerning for obvious reasons. The interviewer mentioned that this could be an elaborate ponzi scheme, which is possible if there is no reputable body to manage this currency. I'm also curious as to how these even work as a currency, as I definitely haven't seen any stores that accept these! Sounds like the idea will eventually be a bust.
ReplyDeleteThe obvious point of the existence of bitcoins is to make businesses less dependent on the government/banking monopoly. Though it is a system that relies on trust is never going to end well as there are always those that are going to get greedy. Bitcoins has not audit process and no way of keeping anyone honest. It also is inherently deflationary as the supply can always be divided but is also designed to appreciate.
ReplyDeletehttp://articles.chicagotribune.com/2011-11-13/business/ct-biz-1113-outside-opinion-bitcoin-20111113_1_virtual-currency-digital-wallet-second-life
Seeing as Bitcoins are labeled as the currency of the future I was interested to see if they actually have any value behind them. I found that like other modern forms of currency, Bitcoins are not a genuine store of value. Bitcoins are nothing more than digits or numbers that reside on the hard drives of those who are using it as a unit of exchange. The power of the Bitcoin is as vulnerable as our current money currency in that its purchasing power can be wiped out by a crash of your hard drive or a loss in confidence in its purchasing power. What I found the most alarming about Bitcoins is that there is no central authority to monitor the exchange of this internet currency. Therefore, the owner of these algorithms could fold spontaneously and take all the money people invested in the currency. Sounds like a large ponzi scheme to me.
ReplyDelete