Best of the Week

Bitcoin The Electronic Currency of the Future

Currencies / Fiat Currency Nov 24, 2010 - 11:42 AM

Best Financial Markets Analysis Article What is Bitcoin?
Cryptography expert Satoshi Nakamoto[1] has created the first completely decentralized, anonymous, electronic currency, called Bitcoin. Bitcoins are divisible digital tokens that can be exchanged across the internet or stored on disk. Bitcoin differs greatly from traditional government issued fiat currency and regulated banking in several important aspects:

Bitcoins have no central issuer, whereas fiat currency is issued at will by a central bank. Currently, Bitcoins are slowly being issued in a decentralized manner, but eventually new issuance will forever halt.
Bitcoin transactions are private and anonymous, whereas current law allows only licensed financial institutions to conduct wire transactions within the banking system. With Bitcoin, no third party can spy on overall transactions.
Bitcoin ownership is safe, so confiscation is nearly impossible.

Bitcoin also differs from gold in important ways. Gold has the advantage of thousands of years of historical precedent as money, as well as having a physical form. Unlike any “soft” currency, gold lasts forever. The only disadvantage of gold is that ownership cannot be transferred electronically (or with paper certificates) without requiring a central repository. The unfortunate fate of both E-Gold and the Liberty Dollar is evidence of the fact that any centralization of a currency system is vulnerable to outside monitoring, tampering or outright confiscation. With Bitcoin “there is no central database for police to raid and no way for your Bitcoins to be stolen”[2] at the institutional level.

How do I use Bitcoin?

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Topics Covered include :

EWT Overview of the Markets and Economy
The Next Market Disaster
Staying Safe
The Electronic Currency of the Future
Gold and Silver Update
Is the Bond Market a Bubble?

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