June 27, 2013 by Liberty
I’ve discussed Bitcoins with significant hesitation in the past. As a rather new technology, there can be alot of hesitation in trusting them with a significant amount of money but I’m liking the signs. Bitcoin is giving off more good signs everyday. My confidence is slowly growing and I’m excited to see what this new cryptocurrency can do for the free markets around the world.
Bitcoins are a virtual currency that develops it’s scarcity from algorithms and limitations in technology. While the dollar can be printed by the US government on demand, no centralized agency can create more Bitcoin without actually working to develop it.
One of the things that makes Bitcoin so amazing is the confidence that people are showing in it. There was a time when currency could only be made with real valuable commodities. Even the American government dollars used to be backed by the gold standard. Today, just about every currency is a confidence based currency. By that I mean, dollar bills have no inherit value. There is no scarcity for paper with ink on it. You can’t eat it and anyone can print it (theoretically). At least with the gold standard you could exchange the money for a certain amount of gold. Today there is nothing backing the dollar up except the confidence people have in the dollar.
The only thing that might be backing the US dollar is nuclear weapons and other advanced military technology. At any point, the rest of the world can lose faith in the dollar and almost everyone in America would become broke.
Bitcoins don’t have a military backing them up. Bitcoins only have technology protecting them. They have no inherent value. At any point the Bitcoin market could lose the confidence of it’s investors and collapse but… it doesn’t look like it will.
Bitcoin Businesses Don’t Just Pop Up
More and more businesses around the world are accepting Bitcoins for payment. This is one of the most encouraging signs possible. While confidence from the founders of a currency is good, there needs to be people willing to accept the currency. Businesses that are willing to do business in Bitcoins are not only trusting the currency, they’re making an investment in it.
A business needs to jump through a number of hurdles to begin accepting Bitcoins. They need to study up on how to use them. They need to invest in the equipment and software to accept them (in some cases.) Most of all, they need to be willing to jump through the legal and tax hurdles involved in accepting payments in them. This is not an easy process. Every business that’s willing to do it is putting a lot of confidence in the economy.
On top of all that, these businesses are accepting a currency that their mainstream audience probably doesn’t use. They’re intentionally stepping closer to a niche audience. If they sell to Bitcoin customers and normal customers, the fact that they accept Bitcoins will get their other customers asking questions. When people start asking questions about Bitcoins, some people will have the confidence to start using them too.
It’s a self perpetuating growth. The more confidence that people have, the more people will become confident. That’s kind of funny because it would even make the network stronger and harder to take advantage of. Once the avalanche starts, (if it starts) there will be no slowing it down.
Retail Bitcoin Businesses
One of the most powerful breakthroughs happening today is the growth of Bitcoin in retail businesses. While thousands of random online shops are okay, to use Bitcoins for everyday spending, people will probably need to have some retail stores that they can shop at with their coins.
The average person buys most of their stuff from retail businesses. For Bitcoins to be useful for their life, the businesses that they shop at would need to accept them as a payment. More and more retail businesses are accepting Bitcoins everyday but the numbers haven’t exploded yet.
Most Bitcoin retail acceptance is coming from people who already have a philosophy conductive to Bitcoins, and businesses looking for a little bit of free marketing. That’s okay but it’s not ideal.
Bitcoins are an ideal currency for people to accept payment in. The fees are virtually nill. They can be exchanged easily. Their value can’t be printed away. Unfortunately, these are not the reason businesses are accepting them. Some businesses may be happy joining a movement but ALL businesses want to make a profit. Bitcoins need to become the profitable option for retail stores across the country.
That’s the time Bitcoins will become widespread.
Despite The Government Harassment
The United States government has been throwing legal matter after legal matter at Bitcoin businesses around the country and it’s becoming more clear by the day that they’re not happy. Government does not want Bitcoins to become widespread. They’re a currency that’s virtually impossible to regulate. They cannot use inflation of this currency as a tax. It makes it a very easy target for government officials.
Supporters of Bitcoin are rightfully worried about this. Every time the US government throws a phony charge at a major Bitcoin company the market becomes volatile. The US government is Bitcoins biggest enemy. I’m gaining alot of confidence in the market though…
The government is throwing hundreds of legal actions against these companies and the market is still, relatively stable. In fact, the market is still growing at an amazing pace, probably still faster than ever before. The government could outlaw Bitcoins today… the real question that would remain is, would it matter?
No government can stop an idea when it’s time has come. People do not trust the US dollar. The same goes for just about every major currency around the world as well. Bitcoins may not be the magic solution but it very well could be. It’s not a perfect system but with everyday it gains in power. The free market of Bitcoins may live with or without the approval of the US government.
Trust Of Bitcoin
More and more people are trusting Bitcoin everyday. While no one should be risking their life savings in it, every person that participates in the system makes it stronger. (I wouldn’t trust your savings in the US dollar either.) The growth in the number of businesses accepting Bitcoins is one of the best signs for the Bitcoin market yet.