Bitcoins: The Circle of…Hype?
September 18, 2011 in Daily Bulletin
Bitcoins are a virtual currency which allow its users to bypass banks and other institutions, allowing them to trade with each other directly under the protection of complete anonymity. Its supporters tout it as the next global currency, but as Technology Review investigates, all is not well in the Bitcoin world. They report:
- Because of all the attention that Bitcoins have been getting, their value has skyrocketed, with a tenfold increase in five days in 2010. As a result of this people see bit coins as an investment more than as a token of exchange.
- The currency is volatile and is primarily traded by currency speculators. In a one year period it hit a low of a few pennies and a high of $33.
- There will never be more than 21 million Bitcoins in existence*
- All this means that people are hoarding the currency rather than trading it. The number of transactions conducted in Bitcoins has gone down, a negative development for the prospects of any currency aiming for world domination.
To read more about how Bitcoin needs to avoid being devoured by a circle of hype click here.
Source: Technology Review
Via: Jake Kennon
*Correction: An earlier version of this article incorrectly stated that there are 21 million Bitcoins in existence.
The fixed amount of Bitcoins make it an obvious candidate for a deflationary spiral and/or hoarding. Bitcoints can function as a medium of exchange but not a store of value. I think it’s primarily used for buying drugs and child pornography anonymously and that will probably remain its niche. Tinfoil hat crowds may disagree, but they vote for Ron Paul.
Another poorly researched article. There are not 21 million Bitcoins in existence, there are only 7,297,200 as of this writing. The rest of the article needs just as much more research.
We’ve fixed that one part now, thanks!