Last week, we discussed in class about money
and learned the different uses for it. We talked about its characteristics and
examples. We also did an activity on different kinds of commodity such as
livestock, gold, wheat, tobacco, manual labour, and so on then talked about its
advantages and disadvantages.
Relating to what we had discussed, we are
going to talk about bitcoins as a commodity and its uses.
What are bitcoins and Bitcoin?
Bitcoin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by pseudonymous developer Satoshi Nakamoto. It is a cryptocurrency, so-called because it uses cryptography to control the creation and transfer of money. Cryptography is the practice and study of techniques for secure communication in the presence of third parties. Conventionally, "Bitcoin" capitalized refers to the technology and network whereas lowercase "bitcoins" refers to the currency itself.
Bitcoins are created by a process called
mining. Users send and receive bitcoins using wallet software on
a personal computer, mobile device, or a web application. Bitcoins can be obtained by mining or in
exchange for products, services, or other currencies. It is generated by
thousands of so-called miners. These are people who, working individually or in
groups called "mining pools," use powerful computer components to run
software that solves a series of mathematical puzzles. Each time the miner
solves the puzzle, they receive bitcoins, which they can trade for currency or
otherwise put into circulation.
So why should they get money
for doing this? The argument is that these users essentially become a
decentralized version of the Bank of Canada. They invest their own time and
resources — like electricity and computing power — and in turn, the bitcoin
network is supplied with the processing power needed to maintain a transparent,
running tally of all transactions. A similar process applies to all alternative
digital currency.
As of last Feb. 14, a bitcoin is worth $720 Cdn.
This video explains the basics of bitcoin:
Advantages and Disadvantages
Pros:
- No Third-Party Seizure
- No Taxes
- No Tracking
- No Transaction Costs
- No Risk of “Charge-backs”
- Bitcoins Cannot be Stolen
Cons:
- It is not widely accepted
- Wallets Can Be Lost
- Bitcoin Valuation Fluctuates
- No Buyer Protection
- Risk of Unknown Technical Flaws
- Built in Deflation
- No Physical Form
- No Valuation Guarantee
Opinion
I believe that
is only the fallacious modernist view of currency that promotes the status quo,
and indeed, provides the constant support for the gold standard. Restricting
currency to single nations that can control policy has enormous precedent, and
that alone will be a driving force against Bitcoin’s adoption. However, unlike
previous era’s, I believe we are now quite firmly in a postmodern age where we
no longer turn to local powers to affect our desires and in turn, repress the
desires of those outside their domain. Rather, I find that Bitcoin’s embodies
the individualist yet cosmopolitan spirit that lurks within us all. I think it
is clear our current level of income inequality is intolerable and
unsustainable.
Bitcoins are a representation of humanity’s desire to broach the confines of history and precedent, and move forward toward a conception in which all barriers to social elevation and self-actualization have been eroded. Bitcoins might not provide us as much financial security in the short-term, but it would definitely empower us overall.
So much of the world's wealth is concentrated in the hands of a few. Maybe a libertarian currency regime can help change that. |