Whether it was a stubborn avoidance of competition of my alternative currency in pre-alpha phase, the Ur Monetary Unit, or a skepticism of the underlying soundness of an arbitrary currency, it took me a while to get on board with Bitcoin. But I’m officially on that board.
The principle behind the currency is excellent. We need alternatives to the fiat nonsense that the Federal Reserve has put out there, destroying wealth and incentivizing consumption over savings for over 100 years. And the mechanics behind the currency is even more excellent, providing for stability, anonymity, and decentralization. This is what Wikipedia has to say about the technology:
Integral to bitcoin security is the prevention of unauthorized transactions from an individual’s wallet. A bitcoin transaction permanently transfers ownership to a new address, a string having the form of random letters and numbers derived from public keys by application of a hash function and encoding scheme. The corresponding private keys act as a safeguard for the owner; a valid payment message from an address must contain the associated public key and a digital signature proving possession of the associated private key.
While this technology may lead to increased clandestine activity due to the anonymity, it also allows us to get off of the Federal Reserve plantation and start working for ourselves. Sure, the federal government has the presumed authority to tax all economic activity (even those transactions in bitcoin), but the more alternative currencies there are, the less ability they have to inflate the currency. The Fed can only print US dollars, they can’t make more bitcoin to drive up prices. So if everyone shifted to bitcoin, we would have gradual deflation. In other words, in a bitcoin economy, prices would generally trend down. Instead of $20 buying less and less over time, it would buy more.
And it’s already happening. There are 61 vendors in my city accepting bitcoin as I write this, up from a handful a year ago. This exponential growth will continue and add stability to the market.
The currency isn’t perfect. I’d like to see a currency that is based on the prices of several commodities, as in the UMU, and one that isn’t completely reliant on computer technology (EMP bomb anyone?), but it could be the perfect vehicle to shake up the system so that other alternatives can be used. That being the case, I’d like to offer you, my readers $5 in free bitcoin! Sign up with Coinbase and once you’ve made $100 in transactions, you’ll receive your reward. Your first transaction can be a donation to me!
Oh yeah, and I think I’m also on board with Overstock.com: