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JAN 29, 2014 12:27pm ET

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Why Bitcoin is Here to Stay


When I stumbled across Bitcoin (or Bit-O-Coin, as my wife likes to call it) a few years back, my spidey sense started tingling. Since that time, I’ve made a few off hand remarks about the future of crypto-currency and received the expected “it’s another Dutch Tulip thing”. While I’m not an expert on the financial markets, I do have an excellent trade record for identifying disruptive technology changes and I’ve concluded that crypto-currency is here to stay.

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Comments (4)
I wonder whither this was written before or after the founder was brought up on charges of money laundering?
Posted by Shawn K | Thursday, January 30 2014 at 11:06AM ET
First the disclaimer: I am not an economist or an expert on finance. That said, I don't think Brian's logic in this article stands up to scrutiny. 1) The financial crisis was not a currency crisis and I'm not familiar with any arguments by economists that the government's control of currency is a problem. The Greeks had a currency crisis precisely because they couldn't control their own currency, as opposed to our government's ability to manage money supply and control the damage. 2) "the internet for money" sounds nice, but what does it mean? True, there are risks and instabilities in world economies, but they are quite transparent and tend to move slowly. Contrast that with wild swings in crtypo-currency values, because there is no mechanism for controlling speculation. 3) Well this is just a libertarian argument, so have at it.

If anything, Bitcoin and the others are exactly like gold, not currency. They have value because there is a finite supply that is hard to extract, they can be used for trade because they have a known value, as commodities they are not regulated or controlled by governments (yet), and they are subject to the ups and downs of the commodities market.

Posted by Jeff W | Thursday, January 30 2014 at 11:13AM ET
While one cannot but agree that this is a real disruptive technology (remember Napster) I believe we are far from saying Cryptocurrencies are here to stay, at least not in their present guise. Not as long as there is obscurity around issues such as (1) how absolute is the "absolute maximum" of, say, Bitcoins ever in existence; (2) how susceptible to manipulation is the "honesty of nodes" on which Cryptocurrencies rely on; (3) how can we ensure we are not simply expanding the rogue trader's toolbox, as opposed to creating a useful-for-all platform, and many more. Democratising the Central Bank may be a good idea, however, I think CDOs and other derivatives can well be drawn on Bitcoins, peercoins, litecoins and anything that can be used as a standard value-carrying component (currency or commodity). I think the real issues are into the extent to which Cryptocurrencies will or will not be integrated into the current market exchange system, possibly calling for them to become regulated in a fuller manner. I also think that this will be up to the incumbent intellectual infrastructure of the markets. All I think we can safely assume is that Cryptocurrencies open up a new debate: whether a peer-regulated framework can match the robustness of exchange standards guaranteed by the sovereign state.
Posted by Georgios S | Thursday, January 30 2014 at 2:07PM ET
In my opinion, bitcoin has a huge impact in the today's financial system. It's here to stay, Winklevoss brothers pointed out that bitcoin could be the next gold. Can't you see Canadian penny has officially phased out . It's because, they are adopting a revolutionized and innovative currency that will not only benefit their people but their economy as well.
Posted by Gala W | Wednesday, March 26 2014 at 10:48AM ET
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