Bitcoin international IconA vertical stack of three evenly spaced horizontal lines. In Bitcoin World, a week can be the equivalent of a decade.
1,200 as e-currency evangelists trumpeted the endless possibilities to be unleashed, comparing it to the breakthroughs not achieved since the start of the internet revolution. Bitcoiners claimed market disruption would bring credit card companies and payment platforms such as Western Union to their knees. Some even claimed that Bitcoin would supplant the U. And from January to December 2013, markets obeyed with prices rising over 8,000 percent. In the mist of this hype, it appeared that the Bitcoin Revolution was on its way to transforming the economy, putting central bankers out of work and minting new e-currency millionaires daily.
This past week, however, the market didn’t stick to the script. Since inception, Bitcoin has had a flawed DNA. It was dreamed up in a virtual world — by computer geeks — but was to be applied in the real world. Bitcoin is steep in Libertarian and anti-Fed dogma but weak in understanding of how global economics, central banking policies and financial markets function. The lifeblood of the global capital markets is money – greenbacks — transactional currency that facilitates commerce.
For currency to be adopted as a medium of exchange there has to be trust in the ability to honor the underlying obligation and the ability for central banking policy to control inflation. Historically the Fed has done a remarkable job maintain an average inflation rate of no greater than 2. GDP is driven by consumption, price stability in currency is essential. Without it, GDP growth is retarded and standard of living shrinks.
Even from a basic operational standpoint there are major flaws in Bitcoin structure. For example, it is assumed that miners will behave in a responsible way and not game the system for greater financial reward. Ignored is the human element and need for controls to keep pace as increases in market prices increase incentives to cheat. Fraud is also on the rise. Meantime, the inherent secrecy of coin ownership decreases the ability to prevent and potentially solve crimes. There is also little legal protection for investors and significant financial risk if an owner’s hard drive gets corrupted, the computer is stolen or lost, rendering Bitcoin Wallets permanently lost.