If money printing policy continues, you know where the value of the dollars is going. The more printed money into the market, the lower the value. Traditionally investors and money makers buy gold to protect themselves.
Gold prices is declining, so what is the safe heaven now? Maybe a new currency? What about Bitcoins? The price has skyrocketed in 2013, and Alan Greenspan say in an intervju with Bloomberg that this is a bubble.
Bitcoin is electronic money and payment network introduced in 2009 by “Satoshi nakamoto” (pseudonymous developer). This system is called a cryptocurrency because it uses cryptografhy to secure transactions.
Specialized computers use a proof-of-work system to prevent people from copying and spending the same bitcon multiple times. This is a known problem called double-spending.
A collection of Bitcoin addresses is known as a wallet. Thefts of bitcoins from web services and online wallet services have been covered in the media, prompting assertions that the safest way to store bitcoins is in a paper wallet generated by the owner on an uncompromised computer.
Bitcoins are getting more popular as a payment for legitimate products and services. Merchants have an incentive to accept the currency because transaction fees are lower than 2 to 3% typically imposed by credit processors. WordPress use bitcons. So does OkCupid, Reddit and the Chinese Internet giant Baidu.
Some people in Argentina use Bitcoins as an alternative to the official currency, which is stymied by inflation and strict capital controls. Some financial journalists have suggested that there was a link between higher Bitcoin usage in Spain and the 2012 – 2013 Cypriot financial crisis.
Professor John Quiggin of the University of Queensland has noted that since Bitcoin by design has no intrinsic value, it is perhaps the finest example of a pure bubble! but cautions that we have no way to predict when the value of bitcoins will return to zero.
Bitcoins association with criminal activities has historically hindered the currency from attaining widespread, mainstream use and has attracted the attention of financial regulators, legislative bodies, and law enforcement. Washington Post called it “the currency of choice for seedy online activities”. CNN called Bitcoin a “shady online currency”. You are hereby warned!
News today: ECB press conference, Prelim GDP q/q and Unemployment Claims at 8.30am.
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