In the last few months, crypto-currencies like Bitcoin, Litecoin, Peercoin, etc. (here’s a list of the top 50 cryto-currencies), have been a story which has consistently dominated CNN and regularly flashes across bottom-scrolling T.V. news tickers worldwide!
Bitcoin and over 50 brand new “digital currencies” have made a splash partly due to their novelty, but mainly due to the dramatically rising value of these digital coins…
Many feel that Bitcoin’s worth extends FAR beyond the quick gains that speculators are making, using it as a tool for daytrading.
Bitcoins can be purchased at an exchange like Mt. Gox, which is based out of Japan and a digital bitcoin wallet can be downloaded from Bitcoin.org.
SO, How Does Bitcoin promote an Individuals Freedom and Personal Liberty?
- Bitcoin is a decentralized currency. No one controls it.
- Bitcoin is difficult for the established power structures to regulate. This includes governments and the financial industry.
Bitcoin is anonymous, peer-to-peer, and decentralized. If it becomes adopted, many of the established controllers of wealth (i.e. banks, payment transfer companies, and especially in the financial industry) will experience major change. Just think of how the music industry changed after file sharing become popular!
Listen to what Bitcoin and “digital money” expert Andreas Antonopoulos says about BTC:
Many investors with the “speculator mindset” about Bitcoin see it as just another bubble waiting to pop…
But, others believe these crypto-currencies are a complete evolution in finance…that empowers the individual. Digital currencies and Bitcoin may be the start of a new trend that will have far-reaching implications in monetary control, online payments, and wealth.
Currently BTC is generating the most interest from speculators.
Stories of “accidental millionaires” are popping up consistently as the world is starting to realize the value in this new form of “digital money”. Much of the attention Bitcoin has attracted is from those who think they are going to “get rich quick”…by profiting as its value increases or decreases.
Riding the dips and rises in the currencies bubble as a speculator is really the least interesting aspect of Bitcoin. As you investigate further into digital currencies, you can see that Bitcoin’s worth extends far beyond it monetary value…into personal freedom, civil rights, and financial security.
5 Reasons why Bitcoin will change everything:
1) Bitcoin’s value – why do speculators like Bitcoin? - As with any type of speculative financial investment (like currencies, stocks, or commodities), prices gain and fall as consumer interest (or demand) waxes and wanes.
The amount of news coverage Bitcoin receives affects consumer interest – daily. This causes demand to grow or diminish, and the price will almost always increase or decrease from this extra attention (or lack of).
Day traders purchase Bitcoins (or other currencies) and speculate as to whether its value will rise or fall. Speculators can follow this buzz and use it to generate quick profits from these value fluctuations. This “get rich quick excitement” ping-pongs from new outlet, to twitter, to the social networks, but is FAR from the reason Bitcoin (or any other currency) will be a long-lasting way to buy things.
On Nov. 29th 2013, when a well-know Billionaire named Richard Branson mentioned that his “space travel company” Virgin Galactic will accept Bitcoin as payment, the story generated massive headlines, and a nice increase for currency speculators.
That very day, Bitcoins rose to a price of $1242 after this announcement was made! (do you really think a Billionaire wouldn’t have a position in Bitcoin if he had the ability to influence its value by talking about it on TV???)
SO, If traders purchased Bitcoins, they were able to ride and profit off this wave of these rising values and demand.
These short term digital currency speculators are looking to make a quick buck by riding the value and demand of these currencies, but aren’t necessarily considering the future implications of this new “decentralized currencies“.
2) Anonymity – The perfect example of extra functional value that Bitcoin has (other than monetary value), which the American dollar does not have, is to let consumers make purchases including on marketplaces that sell illegal goods and services like the Silk Road.
The Silk Road (although shut down by the FBI, but immediately replaced with multiple alternatives) allows consumers to anonymously purchase illegal drugs online!
A marketplace that sell illegal narcotics (and prescription drugs) like the Silk Road may be a thorn in the side of law enforcement and government control, but it serves a demand for consumers. Bitcoin provides a veil of anonymity to purchase goods which are useful and very valuable to many consumers! This extends far beyond the ability to purchase illegal drugs…
Privacy is VERY VALUABLE! Ask the NSA!
3) Elimination of Money Transfer Fees – Payment transfer companies like Paypal, Western Union, or MoneyGram generate millions of dollar in fees from the transfer of money from customers to a businesses.
In places like rural Africa, migrants can spend over 15% of their total income on wire transfer fees! For someone who has an income of $2000/mo., a 15% savings means an extra $300 per month or $3600 yearly. This is extremely significant, especially to a person with a low income.
Payment transfer companies do provide some assistance if arbitration is needed. But their services leave much to be desired.
4) Decreased Goverment Oversight - In many highly regulated and repressed countries like Iran or China, Bitcoin will be gain value as its citizens seek to make purchases which their government restricts. Bitcoin extends freedom and personal liberty. It allows consumers to skirt regulation and opens up access to marketplaces which have been traditionally closed to them.
Bitcoin can be used for illegal activities such as money laundering, the purchasing of illegal drugs.
BUT, in the opinion of many, this gives it INCREASED value. The lack of transparency into personal financial transactions provides increased liberties and personal freedoms surrounding money which allows for options that traditional currencies can’t.
Governments may currently be baffled as to how to deal with the implications of a completely anonymous payment system. This will increase the likely hood of government regulations for these digital currencies, BUT like the global internet, many believe that the government DOES NOT have the power to stop the peer-to-peer technology that Bitcoin operates on!
5) No Bank Account Needed – for people lacking bank accounts or living in places where it is difficult to transfer money, Bitcoin is a complete game changer.
Consumers only need to have access to a cellphone that allows for the transfer of Bitcoins from one wallet to another. This also opens up new marketplaces and allows consumers access to new forms of goods and services.
The Negatives of Bitcoin
Of course, nothing is perfect. Bitcoin is not a perfect system without flaws or drawbacks. Bitcoin is so very new, that no one can predict what will happen if it is widely adopted and becomes mainstream as a form of payment.
Many governments have a tendency toward over-regulation of ideas that threaten their control or power. Many times they can make knee-jerk reactions and create laws before they actually understand the implications of this powerful new way to exchange payment for goods or services. Here are some drawback to the new anonymous currency:
1) Government Regulations – As anonymous digital currencies start to gain traction in populations around the world, governments may see a threat to their power with decreased ability to collect tax money, enforce certain rules or laws, or the ability to maintain certain power structures.
Rich people like to stay rich! They have huge incentives to maintain their current power and wealth. There are many powerful businesses which will do anything they can to influence laws and ensure there will not be a threat to their businesses and lifestyles.
2) Bitcoin’s Value Fluctuates Dramatically – one of the aspects that naysayers have used against the overall value and worth of Bitcoin is that its value is not predictable. Most types of currencies including gold and the U.S. dollar have a predictable value. These values will consistently rise and fall, but tend to remain in a predictable range.
If a business were to accept payment in the form of Bitcoin, they might not want to hold on to the Bitcoins. With a currency that fluctuated widely, it would make more sense to accept payment with Bitcoin and then transfer this money into a more stable form of wealth (such as gold or the U.S. dollar)
3) Security Problems with Bitcoin – There have been numerous incidents of theft involving hackers. There have also been DDOS attacks on exchanges like Mt. Gox, where hackers brought them down in order to manipulate Bitcoin’s value. If someone steals your Bitcoins, there is really nothing you can do about it! Credit card companies and banks would offer assurances in situations like these, but Bitcoin is completely new territory.
Of course, no currency is completely safe from theft. But at least traditional currencies have some safeguards.
Will Governments and Banking Survive the Impact of Bitcoin?
Imagine it is 1999 all over again. A college student named Sean Hayes has just invented a “peer-to-peer file sharing service” called Napster. 15 years later, music is basically free for all listeners.
As of 2014, most musicians no longer try to sell their music…They give it away for FREE. They do this in the hopes that they will be able to make money with touring and merchandise.
Bitcoin (and other decentralized currencies) will do to banking, what Napster did to the music industry. All you need is a smart phone to use it, it is cheap or free to transfer money, it is out of the hands of corrupting influences like politics and government.
In fact, Bitcoins are so difficult for the government to control, that when the illegal drug market The Silk Road was shut down, the FBI was unable to seize his $600,000 Bitcoins its owner Ross Ulbricht (worth over 80 million dollars)!
In this case, the government was not able to seize a Bitcoin users assets. This failure to seize the currency shows how the current power structures will struggle to deal with this new invention!
Here is another video of digital money expert Andreas Antonopoulos explaining the importance of BTC and how it will change our society: