Bitcoins - beginning of the end? Or end of the beginning... 5th March 2014 3:12 PM
I'm going to chime in with some thoughts here:
Bitcoin seems to be taking a bit of a beating lately when it comes to main stream media. The media love to hate bitcoin. It creates great readership which after all is their main MO.
Given it's recent media attention, you would expect bitcoin to be worth zero yet it still holds up against such negative attention and the failing of one of the former largest exchanges around. But the reality is that mt.gox was originally a card trading platform. It was never intended to be a real money exchange yet that is what it became almost by accident.
In the 'real world', something like a fiat money exchange would never be allowed to fail. Inflating the money supply and adding assurances would be the quick response to keep 'confidence' in the money supply. Yet the real impact would be a decrease in the true value of the fiat currency.
In the bitcoin world, when a business/bank failure occurs it is allowed to fail allowing stronger, better performing services to take its place. There is no 'Too big to fail'. And those who fail spectacularly can expect to face law-enforcement. Our current bankers simply get bonuses for bad action.
Here is a great article by one of the best spokespeople in the bitcoin world:
http://antonopoulos.com/2014/03/02/failure-is-an-option/
Hackers are drawn to real money so it's undeniable that there is a draw to hacking wallets. But this will only encourage better development and security in these areas. Bitcoin banks will rise from the ashes to provide secure, insured services that people can trust.
The fundamentals of bitcoin are unchanged and resilient to recent events in bitcoin despite scaremongering by mainstream media that 'there is a fault in bitcoin'. There is no 'Tech Issue' per-se in bitcoin. Only an implementation issue. It can be likened to a traditional exchange setting up shop that was poorly written and allowed a hacker to re-direct payments into their own Cayman Islands account.
The recent events will strengthen bitcoin in the respect that so much money is now involved, that better services will come to take their place.
Finally, having discussed personally with some of the people involved with discussions with the government, the general consensus is that there are many in senior positions who are positive on bitcoin and it's potential. The reclassification with VAT only strengthens this position. However to be classified as legal tender can take time and has to go through the EU courts. Many see bitcoin as a counter to fiat currency failings. The two can co-exist quite successfully and benefit a global community in many respects.
Although I can't advise anyone on financial matters, I do consider the current price to be more reflective of bitcoins current purchasing power with many of the speculators walking away wounded. bitcoin isn't a commodity. It's a currency. It's true value comes in its transactional ability. As individuals find ways to transact with bitcoin, the more valuable as a currency it becomes. It didn't have Billions in investment to give it a kickstart like the Euro. It has to grow organically. Thus it will have it's growing pains as it breaks through amateur services, and hacker attacks.
Ultimate answer: Teething problems. Check back in a year. In the mean time, start accepting and pay with bitcoins. Offer incentives to customers: i.e. 5% discount when paying with bitcoins (because you'll want to realise gains as price relative to fiat rises and zero transaction fees). It's a win-win. Just don't panic if the price drops another 25% because of another exchange/bank/theft/hacker attach. The fundamentals are what matter and they are strong.
Finally: Just like the internet, bitcoin is not a fad. It's a sea-change of how we can fundamentally manage transactions - not just as a currency. It took years before the internet gave us youtube and google, but the early adopters recognised the potential long before the average man on the street. I remember the days, 'This internet fad will pass. I'm not going to bother registering a domain name!'.
Bitcoin seems to be taking a bit of a beating lately when it comes to main stream media. The media love to hate bitcoin. It creates great readership which after all is their main MO.
Given it's recent media attention, you would expect bitcoin to be worth zero yet it still holds up against such negative attention and the failing of one of the former largest exchanges around. But the reality is that mt.gox was originally a card trading platform. It was never intended to be a real money exchange yet that is what it became almost by accident.
In the 'real world', something like a fiat money exchange would never be allowed to fail. Inflating the money supply and adding assurances would be the quick response to keep 'confidence' in the money supply. Yet the real impact would be a decrease in the true value of the fiat currency.
In the bitcoin world, when a business/bank failure occurs it is allowed to fail allowing stronger, better performing services to take its place. There is no 'Too big to fail'. And those who fail spectacularly can expect to face law-enforcement. Our current bankers simply get bonuses for bad action.
Here is a great article by one of the best spokespeople in the bitcoin world:
http://antonopoulos.com/2014/03/02/failure-is-an-option/
Hackers are drawn to real money so it's undeniable that there is a draw to hacking wallets. But this will only encourage better development and security in these areas. Bitcoin banks will rise from the ashes to provide secure, insured services that people can trust.
The fundamentals of bitcoin are unchanged and resilient to recent events in bitcoin despite scaremongering by mainstream media that 'there is a fault in bitcoin'. There is no 'Tech Issue' per-se in bitcoin. Only an implementation issue. It can be likened to a traditional exchange setting up shop that was poorly written and allowed a hacker to re-direct payments into their own Cayman Islands account.
The recent events will strengthen bitcoin in the respect that so much money is now involved, that better services will come to take their place.
Finally, having discussed personally with some of the people involved with discussions with the government, the general consensus is that there are many in senior positions who are positive on bitcoin and it's potential. The reclassification with VAT only strengthens this position. However to be classified as legal tender can take time and has to go through the EU courts. Many see bitcoin as a counter to fiat currency failings. The two can co-exist quite successfully and benefit a global community in many respects.
Although I can't advise anyone on financial matters, I do consider the current price to be more reflective of bitcoins current purchasing power with many of the speculators walking away wounded. bitcoin isn't a commodity. It's a currency. It's true value comes in its transactional ability. As individuals find ways to transact with bitcoin, the more valuable as a currency it becomes. It didn't have Billions in investment to give it a kickstart like the Euro. It has to grow organically. Thus it will have it's growing pains as it breaks through amateur services, and hacker attacks.
Ultimate answer: Teething problems. Check back in a year. In the mean time, start accepting and pay with bitcoins. Offer incentives to customers: i.e. 5% discount when paying with bitcoins (because you'll want to realise gains as price relative to fiat rises and zero transaction fees). It's a win-win. Just don't panic if the price drops another 25% because of another exchange/bank/theft/hacker attach. The fundamentals are what matter and they are strong.
Finally: Just like the internet, bitcoin is not a fad. It's a sea-change of how we can fundamentally manage transactions - not just as a currency. It took years before the internet gave us youtube and google, but the early adopters recognised the potential long before the average man on the street. I remember the days, 'This internet fad will pass. I'm not going to bother registering a domain name!'.
