Making the world work for you - wealth is your choice!
Bitcoin - the pros and the cons
used to be a fairly simple concept.
started off with a barter economy, I
might hunt animals for food and you
might give me clothing in exchange for
tokens became seen as money and these
evolved into gold and silver coins. The
Romans started to use less and less of
these precious metals in their coins and
so the debasement of coinage was
established although the Romans may not
have been the first.
banks started to issue notes against
deposits and these led to Governments
issuing bank notes which did away with
Gold and Silver altogether.
banks started creating money by lending
out far more than the deposits they
received. In fact banks are the biggest
source of money supply at this time.
us to the present day where most
currencies are debased again and again
and the actual coins have no real value
other than that given them by the trust
we have in those notes and coins.
that trust is abused as the Germans and
Austrians found out in the 1930s when
they had to carry masses of notes in
wheelbarrows to buy a loaf of bread (I
do wonder whether this actually happened
but, if it did not, it still illustrates
So I think
a fair starting point for a discussion
of BitCoin is the question...
DO YOU TRUST THE CURRENT SYSTEM? DO YOU
TRUST THE BANKS, THE £££, THE $$$, THE
is YES, I tend to keep notes in my
possession of all three and I keep money
in banks. Even though I am aware that
once I make a deposit with my bank that
money is then owned by the bank, not me,
I am merely a creditor of the banks.
is a qualified YES, I'm fairly sure that
if push comes to shove any bank will
grab what it can of my cash to save
itself from going under. And the risk of
a bank going under seems to be something
of a constant these days!
But if the
alternative is I lose all of my deposit,
then it is better to let them take it -
not that I would have any power to stop
On top of
that every country seems very keen to
debase its currency by printing ever
more money, in whatever form, and is
also keen to see its currency fall in
value against other currencies.
So the situation is hardly ideal.
I hedge my
position by holding deposits in various
banks and in various currencies and by
holding Gold and Silver coins.
where I see Bitcoin coming in useful.
a crypto-currency and payment system and
was introduced on 31st October 2008.
of Bitcoin is limited to 21 million and
by 2016 15 million had been created. It
is expected Bitcoin will reach the 21
million maximum by 2140, ie in 24 years
The big plus of Bitcoin is that it is
not possible for any Government, or any
one else to debase this currency, at
least not directly.
said that the value of a bitcoin is
subject to market fluctuations.
plus is the growth of Bitcoin
Bitcoin transactions were running around
10,000 transactions per month (tpm),
they hit 100,000 tpm in 2011 and 1
million tpm in 2012. Currently tpm is
running at around 7/8 million with the
annual $ value of transactions in excess
of $50 billion.
So 8 years
after inception it is all going rather
well and to me it is all about continued
growth and acceptance.
figures continue to grow then I would
expect the value of a single Bitcoin to
keep on going up.
are risk factors, or cons if you
fluctuates, and, for example, fell in
December 2013 when The People's Bank of
China prohibited Chinese financial
institutions from using bitcoins.
In fact I
think that Government action is probably
the biggest risk factor. The mathematics
behind Bitcoin has stood the test of
time and the idea (Bitcoin is truly part
of new "Ideas" Economy) is decidedly
But I can
see that Governments might actually find
Bitcoin useful for their own purposes.
It is a very simple way of sending
untraceable cash to wherever they may
want it - a fairly useful facility!
want to do further research I would
suggest this book...
Bitcoin - The Future of Money by Dominic
comment by Richard Branson about this
book... "Read it and
glimpse into the future!"