Bitcoin: The Next My Precious Currency?
If you have never heard of “Bitcoin” you might want to learn because it is ramping up to be the next “it” coin. Bitcoin (BTC) is an online commodity that is engineered as an open-source peer-to-peer encryption protocol. It is not managed by a central banking authority and because of the volatile nature of global banking, it is creating concern. Bitcoins can be transferred through any digital device such as the PC, smartphone, and iPad.
Bitcoin bubble was predicted to burst weeks ago
It is more complex than the virtual money used in the digital world Second Life called “Linden Dollars.” Here this digital money could be transferred from checking accounts into the digital world for buying and trade. It opened the door for anti-money laundering regulation because of the fact, there was no regulation. It would be very easy to sell digital products and real-estate and convert the “Linden Dollars” to real US dollars.
Cameron and Tyler Winklevoss — the Harvard twins who have argued for years that Mark Zuckerberg stole the idea for Facebook from them — this week told the New York Times that they had massive holdings, at one point valued at $11 million, in virtual currency Bitcoin.
Various people who capitalized on this virtual world became actual millionaires. The digital transactions caught the attention of not just the banking industry but the FBI. The problem with digital currency is regulation and controls and inevitably hacking. Second Life is alive and well all though years ago companies were paying millions of dollars to create a presence in this world. It never lived up to its much ballyhooed expectations.
Bitcoin raises serious security issues technically and monetarily. What happens if the Internet is down or money is stolen? The cash based banking industry is FDIC insured, while Bitcoin is not. In the end, Bitcoin is not much different than the American dollar, since the gold standard was eliminated in 1974. Money is no longer backed by a precious metal but the illusion of value. The “Linden Dollar” is still in existence so we can assume the Bitcoin will not die.