BITCOIN (SH or H?)


What’s your guess? Is the “Bitcoin” a Shitcoin or a Hitcoin?  My guess is shit. I’m just saying.

Do any of you have bitcoins? You can buy them on three sites that I know about. The biggest seems to be “Mt. Gox.” If you want to check them out, here’s the link: https://www.mtgox.com/
Other trading sites are “Tradehill” and “Bitstamp.” The conspiracy theorists love the bitcoin. Some of them have already lost their ass thinking they were going to make a killing. Smarter people then the bit-coiners thought the same thing five years ago and they were running huge banks and hedge funds.
bitcoinsWhen the banks and the economy went tumbling, this mysterious programmer who used the name “Satashi Nakomoto” proposed this ‘peer to peer electronic’ cash system. It was sort of like buying and betting on gold except you didn’t get any gold. You just got a digital entry in an invisible bank. It was supposed to replace dollars, yen, euros, pesos, reals or whatever your country was printing to be used to buy goods and services. When the banking crisis happened earlier this year in Cyprus, the bitcoin took off. We know that many countries (ahem) will de-value their currency for economic gain, so the bitcoin supposedly will counter that move. For instance in 1960 I could buy $700 worth of stuff with this bill: one hundred dollar billA few months back bitcoins could be purchased for a few hundred dollars. There are many places in many countries that will allow bitcoins to be used to purchase goods and services. Many, but not a lot.  The cool, but maybe illegal thing about bitcoins is they are totally unregulated and totally anonymous. A person can move huge sums of money out of one country to another in complete secrecy. And it was being done by not only Greeks and Spaniards but drug lords and weapons buyers and sellers. The bitcoin took off and the value climbed to over $1200 last week. Like the gold bugs, the bitcoin bugs started buying when it went over a thousand. Being anonymous, we don’t know for sure how many got stung but the feelings are it was many.

For instance, let’s say you decided on Monday or Tuesday last week, you wanted to move your Euros out of Spanish banks using bitcoins. Bitcoins were selling at $1200. You could move them and not have to worry about Spanish banking laws or exchange rates. Then you could exchange them for dollars in America. Except on Wednesday the Chinese made a simple statement about bitcoins. They said “whoops”…you can use them as legal tender anywhere that folks will do that but they are not legal tender in Chinese banks. ZOOM…the bitcoin value fell overnight to $600. As of today it’s back up to around $730. It will continue to fluctuate like gold but probably more volatile.

If you have some money you can afford to lose, then buying back in now might be a good short term money-maker, but let the buyer beware.

Who accepts bitcoins?  Well this very sight I’m blogging on does. WordPress accepts bitcoins. The social news site, Reddit, accepts bitcoins. Others can be found here: https://www.spendbitcoins.com/places/

There’s a whole other huge topic….Mining Bitcoins…I will not get into. Supposedly there are around 21 million bitcoins that have been “mined” (remember they are anonymous and unregulated). People with huge maxi-speed computers are tracking (mining) bitcoins and being paid in bitcoins to mine them.

Confused?  More info on mining bitcoins for fun and profit can be found here in this Wall Street Journal column: http://online.wsj.com/news/articles/SB10001424127887324665604579079721277783300

May your treasure chest be filled with bitcoins someday. No shit!

About bakoheat

Writer/Musician
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2 Responses to BITCOIN (SH or H?)

  1. fiddlrts says:

    In theory, there is no reason why a currency like this could not function. In theory. After all, all money systems are based on the idea of using a token for exchange of goods, so that one does not have to directly barter.

    The value of any system is found in the stability of its ability to purchase, which is why currency has been largely under government control since its invention. Even precious metals have this problem, because most people do not have a direct need or use for gold. It too fluctuates in value – actually much more than the currencies of stable nations.

    That is the big weakness of Bitcoin, of course. Can its non-governmental regulators keep value stable enough so that it can be counted on, or will it become like a Latin American currency, completely useless because of volatility? Will the present limitations in converting it to other currency be a problem? All very good questions.

    I tend to suspect that it will tend to have less stability than the dollar or the euro because there is so much speculation. It will be interesting to see if it becomes a cautionary tale, or a much-studied success…

    • bakoheat says:

      I agree on theory, but look what’s happening already in the marketplace. The Winklevoss brothers (failed to prove they were Facebook creators) have announced plans to start a bitcoin related securities offering. Won’t take long before Goldman Sachs figures out how to bundle them into a credit-default swap and sell them to Greek bankers. Of course AIG will write the insurance against defaults. (and of course G.S. will buy puts on the whole transaction. And the New York banking regulators have launched an investigation into bitcoins calling them “a virtual wild-west for narco-trafficers and other criminals. I must admit the libertarian corner of my brain says “go bitcoin…do it!”

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