Bit Coins - Has anyone heard of this?

After Lodge last night a bunch of my fellow Masons and I went to a bar and the 3rd in Command for our Lodge is a big tech nerd.

He started talking about "Bit Coins" and how they work. I was just curious who else had heard about this? What are your thoughts on the matter?

http://en.wikipedia.org/wiki/Bitcoin

 

After doing some quick online research, it appears bitcoins are overrated.

But bitcoins may potentially be useful for buying and selling information through the internet, including music and video, and possibly advertising space.

 

No bitcoins are far away from being overrated. In fact, bitcoins are the key to our new Money System, which is based on sound Money, like Gold and silver. Hope, People will follow this development and help spread the idea, that the FED is responsible for all those inflations.

 

Interesting concept; until today I've never heard of this.

 

It's certainly intreseting to say the least. Money on the internet, might be the future of economies.

 

Then I would suggest they/you need do a far better job of explaining what and how they work and, especially to this non-nerd, how my bitcoins are going to be kept secure in a completely non-regulated environment?

 

What does Bernanke basically do?
If economy is slipping into crisis and governmental influence widens in all areas of people's life, the FED bank creates money out of thin air, so called Fiatmoney or paper money, which should stimulate and boost the economy, according to 'genuis minds' like Krugman and Keynes, but actually that increase of the credit amount causes the prices to climb and the Investment goods to heat like Gold did before collapsing. And then you blame every bit of problems on capitalist behaviour. This goes on and on, but basically, if the money masters would implement value-guaranteed money, which is not printed by Bernankes henchmen, you did not have those unbelievable price index rates and general impoverishment, People living outdoors in teents.
It's the money socialism, the Monopoly and state interference which will bring down the american economy System.
The Advantage of sound money, you share the actual guarantee and, by the fact, that prices normally decrease in the speed of productivity and labor, you can save your money from the market, whcih will cause him to stabilize the prices by lowering a bit, while you spend it, you receive more purchasing power.
If you want to know more about this stuff, I can recommend Thomas Woods, Guido Hulsmann, german libertarian money expert here in USA, and Ludwig von Mises and his Institute. But there are quite a few authors on this particular bit.

 

Bitcoins are designed so they function securely without a central authority regulating them. They don't require government to function, nor do they require banks. They cannot be inflated at will by any government or bank either, which is exactly how banks today make a lot of their money. Digital money is not new--that is how credit and debit cards operate. But the way bitcoins are stored and created is entirely new, as they are encrypted across a massive public network. Here is a basic intro video:
https://www.weusecoins.com/en/

Bitcoin is a revolutionary concept. And the more it becomes viable, the more the feds will crack down on it. Why wouldn't they? It destroys their authority entirely. And cracking down is exactly what they are doing now, as 1 bitcoin has steadily traded at around $100 for a while now.
http://online.wsj.com/article/SB10001424127887323582904578485391717441224.html

 

Thanks, as it is more enlightening than what has come before I would have appreciated a more academic approach, although mild the hype and generalities did little to curb my suspicions. Having been burned in writing contracts I am very reluctant to trust a system where the normal laws enforcing contracts written and unwritten can't be enforced.

Not everything governments do is wrong and the fact the US is cracking down does nothing to allay my concerns.

 

Yea it's what I have left after taxes

 

Nothing against Masons in general, I'm a Mason myself, but this "Bit coin" thing sounds like a scam to me.

 

How so?

 

A big reason the US does not like bitcoin is because it is used as a currency for buying illegal things, such as drugs. There is a website (not easily found without some work) called Silk Road that sells illegal items and accepts bitcoin as payment. Its basically a currency of the black market. But because it eliminates banking fees entirely, many entrepreneurs see profit potential and are trying to bring it to more widespread use (which will of course be very difficult).

Do you have an example of the laws you are concerned about? Here is some more academic and through explanation of bitcoin exchanges, much of which I would need to read more to fully understand myself.
https://en.bitcoin.it/wiki/Contracts

I think it is likely bitcoin will eventually fade away, but online crypto-currencies will not. I see bitcoin as the pioneer currency, with other improved currencies to follow.

 

How much have you profited from bitcoins?

 

I haven't bought any. I have a few fractions of bitcoins I got for free that amount to $1, but I wouldn't call that profit. How is bitcoin a scam? Its not a company that is luring investors. There is no central authority that issues bitcoins...that's the point behind it. Is it volatile? Yes. Is it risky to invest in bitcoins? Of course, only a fool would deny it. Does that make it a scam? No.

 

Another Mason there said the same thing. I'm still not sure myself.

 

Bit coins are a horrible idea.

 

Eliminating bank fees is a horrible idea? Do you work for Bank of America or something?

 

You buy into them and see. A form of currency without wide acceptance will have to be exchanged, you will still have a bank. If the currency gains enough acceptance the governmt will outlaw them. They always have.

 

Neither of those things make bitcoin a horrible idea. Regardless, it is impossible to outlaw bitcoin. There is literally no way to manipulate it. That is what makes it such a good idea--it gets around the problem of a government trying to put an end to it. If an entire economy developed around soley bitcoin, there would be not way to shut it down without shutting down the internet. So if it gains widespread acceptance (which it probably wont, I see it more as a pioneer in what is to come) it wont be shut down. There is simply nothing to shutdown.

 

Private companies have tried private currencies before. The government shuts them down by law if they gain any real traction. You can buy old scrip on eBay these days but there only value is as collectors items.

 

Bitcoin is not a private company. There is literally no owner--it is a decentralized currency. That is what distinguishes it from other attempts at private currency. The fact that you would link bitcoin to a private company suggests you really just haven't researched it at all yet. Here is an incredibly brief introductory video about bitcoin.
https://www.weusecoins.com/en/

I really suggest you research bitcoin and what it is before bashing it as a bad idea. How can you bash an idea that you don't actually know?

 

Who owns the website and manages the currency? You don't even think no one runs it. If the government taxes it, shuts down the website then what? They have done it numerous times in the past and will do it again if it catches on. Meanwhile bit coin is the least stable currency in the world. As a seller how do you keep up with the changing prices? I can't pay employees or any of my expenses with a bit coin. Plus I have to convert all the time to pay taxes and etc.., good for drug dealers only.

 

There is no website. Bitcoin is not a website. The currency cannot be run or controlled--I don't say this metaphorically, I mean it literally. The technology of a digital cryptocurrency like bitcoin makes it impossible to control in the way you are assuming it can be controlled. I am sorry, I don't mean to be rude, but you simply do not understand how it works at all. There is no owner, there is nobody "running" bitcoin. There is no "bitcoin currency website" where bitcoin is created. Honestly, I suggest you just read up on some literature about bitcoin. I really can't discuss anything with you until you accept that it cannot be controlled.

 

When I first heard of Bit Coins I was fascinated for about 2 days with them. But it just reinforces my view that money is what we agree that it is. The part about them that I found most interesting is that when they where first created you had to 'mine' for them. Which was basically just having a software program run a code cracker. I don't see a long future for them economically because it'll depend on venders legitimizing them, and the Big Brother could come in at anytime and crash the party, and it's volatility with inflation/deflation could render it unusable. But ultimately I think it's story will be a great learning tool for econ students in the future.