We are putting our money, er Bitcoin where out mouth is
I have been broadcasting and posting about Bitcoin for the last 18 months. I usually get one of three responses. I either get a question, some advice or some negative feedback. Bitcoin is a very new online payment system and more. Bitcoin is not only a way to pay online but it is in itself a currency that has been in existence since January 3rd 2009.
Bitcoin is somewhat complicated to fully understand. But there are some easy ways to explain it. First I should elaborate more on the questions and comments that I have addressed when speaking to friends and colleagues about bitcoin.
1st the questions
- What is bitcoin?
That is the simplest but most often asked question. So to give you my idea of what bitcoin is I would call it a better alternative to the funny money that is most commonly used in the USA called “Federal Reserve Notes” or “United States Dollars”. Common USA currency has no commodities to back it, it is printed at will at the request of the unregulated federal reserve. Until August 15, 1971 the US Dollar was backed by “the Bretton Woods System” which was ended under Richard Nixon and thus eliminating our commodity backed currency (aka the Gold Standard) in any major world market.To quote
“Bitcoins do not have the backing of and do not represent any government-issued currency. Hence the value of Bitcoins depends solely on the expectations the userbase places in them. It is the first of a new breed of cryptocurrencies that do not require a central authority.”
Which is similar to USA currency on that it has no commodities to back it. But the difference is that since it is a community based, non-centralized currency neither the government nor a central bank can universally inflate or deflate the value by adjusting interest rates or with flooding the market with currency.
- How can you get bitcoin?
This is a very common question too.
There are many ways to get bitcoin.
- Mining bitcoin is a way to help the bitcoin community and get paid by letting the community use the processing power of your computer. Most people who use bitcoin do not do this as it is often costly to get started and very competitive. (This website is not a website that I am very familiar with but explains the process very well) See: http://www.weusecoins.com/mining-guide.php
- You can sell items for bitcoin at online market places. Read more about that here; https://en.bitcoin.it/wiki/Trade (browse to the bottom of the page)
- You can play certain games for free that have a bitcoin pay out for playing like this online casino http://dragons.tl/
- Lastly and this is my least favorite method, you can also buy bitcoin with standard currency on bitcoin trading sites and places like ebay or or MtGox.com
- Is bitcoin legal currency? As far as I know there has not been any problem using this, and in fact recently a US congressman add a bitcoin donation system to his campaign website: US State Representative Mark Warden has added a Bitcoin donation system to his campaign Website, marking the first use of the decentralised virtual currency system by a sitting incumbent politician.
- Why use bitcoin?
My answer comes in the form of a question. Why not? And why use US dollars?
As for the advice. These conversations or comments are few and far between. But sometimes I get the advice of :
- “what if someone hacks your computer, it happens you know”.
- Or “bitcoin is not as universal as standard currency”.
- Yes people do get their computer hacked, and sometimes they do lose their bitcoin. If you are prone to getting viruses, or getting hacked, I recommend that you either do not use bitcoin, or have your bitcoin hosted by a bitcoin bank. (I personally do not use these banks, but I have signed up at Flexcoin.com to test it out, seems legit enough but I do not know much about that website or company).
As to the second comment “bitcoin is not as universal as standard currency”.
- That is true and false. Because you can trade bitcoin for prepaid debit cards and bullion as well as other types of universal payments like gift cards.
Now for the criticism.
- Recently a large bitcoin holding firm lost 17,000 bitcoin and was the 3rd largest bitcoin holding firm in the world.
Reponse: this is true and it is similar to bank robbery or online theft. It happens to all currencies. But with this loss came a sign of a great strength in the bitcoin community when MTGox.com acquired the company and reimbursed all of the users for their lost bitcoin
So not for the meat and potatoes of this article. We have recently started several online auctions with a small level of success selling tangible products for bitcoin. Including hemp soaps, camping equipment, collectors knives, backpacks, tents, and bullion at http://bitmit.net/en/user/hdtradingpost/?ref=4028
This currency is so significant to us, that we are putting the new and valuable retail items from our store for sale in exchange for bitcoin. Proving the market and creating a new avenue for our business.