Interesting concept. I'd heard of it before, but never really looked into it much at all. Sounds like an idea with a lot of merit and potential, even if it's not exactly the most stable market at the moment.
I stumbled across bitcoin about 2 weeks ago. I did a lot of reading and remember a few points. 1st was the claim that if you have bought $1000 worth of bitcoins at the inception, you would now have $1Million. Second, at one point there was an incredible devaluation of bitcoin. Enough for me to not be interested.
http://nerdr.com/bitcoin-exchange-scam- ... worthless/
First, a disclaimer. As I stated above, I have no prior history with bitcoin and have no vested interest in it, financially or otherwise. Everything I'm about to say is from my own research on bitcoin today.
Now that that's out of the way...
Everyone is entitled to their own opinion, but at the risk that either you're not remembering the details of the two points you mentioned, or someone comes across your post at face value, let me elaborate on said details (which I only know because I ran across both of them in my reading over the last hour or so).
"if you bought $1,000 worth of bitcoins at the inception, you would now have $1 million"
This is entirely because of the market value. Like any stock, commodity, or currency market, the value varies over time. Given that this is a relatively new, unproven market, it makes sense that the value would vary more average. From what I read, when bitcoin launched, 1 BTC (bitcoin currency) was worth ~$0.01. The current value
of 1 BTC is more like $7-$8, down from a few months ago when it apparently was sitting around $15 for quite a while. So yes, for a while there was a 1,000x relative deflation from launch. As with anything else, it's worth exactly what someone will pay you for it and nothing more.
"at one point there was an incredible devaluation of bitcoin"
Assuming you're talking about the incident I read about there's a bit more to it than that. Instead of rewording, I'll just quote Wikipedia for this.
On 19 June 2011, Bitcoin prices against the USD remained high, despite a security breach of the Mt. Gox Bitcoin Exchange, which notably caused the leaking of usernames, emails and MD5 hashed passwords of over 60,000 users onto the Web. A majority of those passwords were also salted. Passwords that were not salted had not been used recently. The price of a Bitcoin briefly dropped to $0.01 on the Mt. Gox exchange (but remained unaffected on other exchanges) after a hacker using credentials from a Mt. Gox auditor's compromised computer illegally transferred a large number of Bitcoins to himself and sold them all, creating a massive "ask" order at any price. Within minutes the price rebounded to over $15 before Mt. Gox shut down their exchange and canceled all trades that happened during the hacking period. The exchange rate of BitCoins quickly returned to near pre-crash values. This incident sparked a new breed of Bitcoin trading websites claiming better security.
So, yeah, it's not exactly a stable, bullet-proof, market at the moment. Will it ever be? No clue. But I do think it or something like it is a great idea.
I read all three articles on NERDr (one of which Gordo linked), and from what I can tell he seems to be operating from what, I think, is a fundamentally flawed assumption. In fact, he was so kind as to lay it out in one of his articles:
I’ve said it before and I’ll say it again; their are 3 main users of Bitcoin:
-The Money cleaners/tax evaders.
-Those involved in non-legal activities.
Basically, that the only people who might have some interest in using it are those who would use it for illegal or legally questionable activities, and for whom the relative anonymity is the sole reason to use it. All three of his articles are based around this core belief, and the belief that because of that, if the anonymity were to be compromised at all it would disappear. Also, the belief that it is a pyramid scheme and an evil thing that should be purged from existence as quickly as possible.
I'll be straight here....I can't see where the evidence for any of those assumptions and beliefs are, and tbh some of his ideas for getting rid or it are downright disturbing from a basic human rights level.
Laws can quickly be introduced banning the use of Bitcoins and other artificial electronic currency as payment of goods or service.
I'm sorry, the thought of my government trying to tell me that I cannot accept something as payment for goods or services (unless that something is in and of itself illegal for completely separate reasons) is absolutely absurd....and the fact that there are people actively endorsing such legislation is just appalling.
Is bitcoin being used for illegal activity right now? Yeah, of course it is. So is every other currency on the planet.
Like I said, I think bitcoin, or something like it, has real potential to be a solid, long-lasting, thing. There are some technical and social problems that will have to be overcome, but I think 10 years in the future, looking back on this, we'll laugh at articles such as this one
, calling bitcoin such things as "the most dangerous open-source project ever created", or, my favorite for the commentary it gives on the person who wrote the article, "the most dangerous technological project since the internet itself".