What if you received your next payroll direct deposit in bitcoin? Would you know what do with it or how to use it to buy groceries? Most people don’t. Even if you “Google” it, the definitions for Bitcoin are detailed and hard to understand. I hope this article can help you understand more about bitcoin.
The global financial plummet of 2008, was devastating. In fact, people are still reeling from the losses experienced during that season of fiscal upheaval. Because the global economy almost collapsed, the central banks did something very risky. They printed money that was not backed up by gold or any other precious metal. This is called quantitative easing.
Printing money that has no value causes fluctuations. If the value of currency fluctuates, we are in danger of total economic collapse. The central banks needed to be saved. In simpler terms, central banks wrote bad checks. These bad checks had to be covered by some kind of “real” money. This did not happen. Therefore, to prevent a catastrophic global economic crisis, governments bailed out the banks by printing extra currency.
This just added more debt. This debt will be covered by the taxpayers of the future. These decisions were made by bank and government officials. Yet, you and I will pay the price. The regular, everyday person had no voice in any of these decisions.
Bitcoin was created to level the playing field. You can buy and sell with bitcoin and it serves as an investment. Based on a complex mathematical operation called an algorithm, the value of the bitcoin varies. The algorithm measures the current value of precious metals and does not allow the bitcoin to exceed it’s calculations. People who invested in bitcoin when it was first created are now millionaires.
CNBC.Com explores the good and bad side of investing in bitcoin. Bitcoin is limited. Only 21 million bitcoins will be issued so that it does not become just another type of empty currency. Bitcoin value is determined by the algorithm and not on the opinions of government and banking officials.
The downside of using bitcoin is that it is still an elite currency. In other words, you cannot use it at the grocery store to buy a tube of toothpaste. Therefore, it has no value to the basic consumer. People are also frightened to take the leap into wide usage of bitcoin because it is digital. It exists only in cyberspace. While futurists agree that all currency will one day be electronic, that day is not here.
One of the most concerning fears of using digital currency is that bitcoin may not be secure. Bitcoin.Com, raises the question of criminals and terrorists who may try to use bitcoin for mal intent.
Bitcoin can be a wonderful option for today’s consumer. But I’m afraid we are still years away from it being our main currency. Progress takes time. I hope bitcoin makes it into our future.