An article from the
NY Times technology section caught my attention this morning. In the
fall of 2013, I spoke with my uncle regarding the rise of Bitcoin
prices and its legitimacy as a cryptocurrency. It was a currency that
had been around for a few years, but only recently started to get
noticed by the mainstream population. I was a bit headstrong during
this conversation, believing that Bitcoin would soon be a new online
mechanism to purchase goods and services, while he insisted that in
the near future Bitcoin would be no more. Well, it turns out that we
were both wrong.
Since that
discussion, the value of the Bitcoin has taken a tremendous plunge
from it's strong value a year and a half ago. It is down, but
definitely not out yet. The Winklevoss twins, who were in a legal
dispute with Facebook founder Mark Zuckerberg, are interested in
reviving the cryptocurrency. They intend to create a Bitcoin
exchange: something that would resemble an electronic exchange system
like the NASDAQ. The Winklevoss twins have begun working with
engineers, banks and regulators to help develop this exchange. They
wish to name it “Gemini” and have it open in the upcoming months.
The twins are
funding Gemini themselves: they argue that there needs to be a
stronger foundation for the cryptocurrency to be successful. At this
time, Bitcoin is extremely volatile; prices rise and fall drastically
in short intervals of time, which, right now, doesn't make it a
viable currency solution. This is why the twins believe a solid
foundation is paramount to Bitcoin's success. They have a preliminary
version of Gemini running and are awaiting approval from a New York
financial regulator to make it available to the public.
If the Winklevoss
twins can get approval from the NY regulator, this might be a fresh
spin on the management of Bitcoin. They are intent on regulating
Bitcoin, which is something the cryptocurrency has not utilized in
any of the previous exchanges: it was always decentralized and
outside of the government's hands. Currency that is not regulated
might sound like a good idea on paper, but that's not necessarily the
case. An example of such an unregulated exchange was one that the
twins themselves invested in; in 2014, one of the executives of that
exchange was arrested due to money laundering.
I believe that
Bitcoin has the potential to be a stable, digital, mainstream
currency. With the proper funding and financial experts, the
Winklevoss twins can create a regulated Bitcoin exchange with proper
financial backing and trustworthy exchange owners. Bitcoin can become
another mode of payment, such as PayPal, and also another type of
currency, like the dollar or euro. The regulation and stabilization
of Bitcoin could very provide a new type of currency that can join
the ranks of the US Dollar as the go-to choice for online currency.
The major hurdle that Bitcoin faces now is its perception in the
media; a recent breach in Bitcoin exchanges and bankruptcy of another
aided in the plummet of its value. This attempt by Winklevoss twins,
if implemented properly, could propel Bitcoin into a mainstream
currency; if implemented improperly, it could spell the end of the
cryptocurrency.
Source: http://dealbook.nytimes.com/2015/01/22/winklevoss-twins-aim-to-take-bitcoin-mainstream-with-a-regulated-exchange/?ref=technology
Bitcoin is certainly an incredible technical feat. My question has always been "why?" Unless I want something illegal (Silk Road) or I inherently love the technology or I have strong libertarian/anarchist/whatever politics, why would I bother to go through the pains of getting Bitcoin when I can use US $'s via my everyday accounts with perfect ease? I think for the average person the pain of using ordinary money would have to rise above the cost of even thinking about Bitcoin before most people would care. Do you agree? Or is the point a different one?
ReplyDeleteI'm pretty displeased with how Bitcoin has been portrayed since it has gotten into the spotlight. As a proof of concept, Bitcoin is so much more than some fabricated currency conceived with the intention of scamming investors out of their well-earned cash or as a means to buy drugs off the internet. These two points are often the only two people are concerned, or interested, in talking about. I'd just like to point out one nice thing about Bitcoin, in that its production is autonomously regulated.
DeleteBitcoin is a currency governed by mathematics. Math isn't influenced by greed or corruption. Lobbyists can throw money at an algorithm all they want, threaten it, it will continue to conserve/preserve whatever currency it controls.
The problem with today's currencies, is that they are all too heavily influenced by the actions of people, and may fail if a state or entity fail to uphold their duties at managing it well. I do not believe it is irrational or radical to propose a global currency that is capable of autonomously maintaining stability, over today's currencies that fluctuate, sometimes drastically over time, with the stability of whatever government has the most of it.
Bitcoin is certainly not the currency that will solve the issues we see today with governments printing money to bail out banks andinfluence the market. It is however something that will someday lead to a form of currency that must be conserved and not just printed willy-nilly. Perhaps the production of money isn't something people should have immediate control over.
It's more than just a fad, crypto-currency today is very much in its infancy. Mass-media hoopla about Bitcoin in headline news along with missing airplanes and murders will always dominate the practical applications and services it may provide. Keep in mind the world wide web has only been around for 25 years. As the internet and digital currency matures, it will have more relevant meaning to people's lives.
Great post... better than how I could've said it.
DeleteI agree that people do not see a reason to use Bitcoin, it is hard to get and possibly cumbersome to use and even strange to think about in terms of prices. Even aside from this I feel that security should be another concern on everyone's minds. There have been a few Bitcoin exchanges that have been shut down due to hackers stealing other people's Bitcoins and I believe that is much of what caused the price drop in the currency. People were scared they would lose their money and as a result were more wary with and less interested in Bitcoin as a viable currency. In order for this new exchange plan to really take off I think they need some sort of security promise or maybe even a proof of concept to the end users so that they can regain their trust in the system.
ReplyDelete