I was at a technology conference earlier this week, and the most popular topic of casual conversation was
Interestingly, the conversation started before Bitcoin prices went bananas earlier this week.
During dinner on Sunday night, Bitcoins were worth about $35 apiece.
By the time the conference ended this morning, they had hit $49.
That meant that one of the folks who extolled the virtues of Bitcoin to me at dinner on Sunday had booked an electronic profit of 40% on his Bitcoins in three days.
Not bad!
According to this chart below, though, the value of Bitcoins has now crashed all the way back to $34, so the profit was shortlived. It was presumably nice while it lasted, however. And the price is still much higher than it was a year ago. And many multiples higher than it was two years ago.
One of the things that's most fascinating about Bitcoin, I have leaned, is that it entrances fanatical conspiracy theorists, clear-eyed pragmatists, and diehard skeptics alike.
The fanatical conspiracy theorists love it because, at least theoretically, Bitcoin represents a "store of value" that is out of reach of the meddling hands of evil currency-debasing central banks and deficit-spending governments--and because it allows them to transact anonymously.
The clear-eyed pragmatists love Bitcoin for a similar reason: Over a long time horizon, the value of paper-based currency gets inexorably destroyed. ($0.04 in 1913 bought as much as $1.00 does today). So the world really does need a good store of value. And if Bitcoin's promise is fulfilled, it might be one.
The diehard skeptics, meanwhile, think that Bitcoin is just a clever Ponzi scheme and that, eventually, the value of Bitcoins will crash, leaving a bunch of suckers holding the bag.
And no one knows for sure who invented Bitcoin.
And people have stolen Bitcoins (sort of).
So there are elements of fear and intrigue, as well.
Anyway, if you're feeling adventurous, you can speculate in Bitcoins or buy things with Bitcoins. Or you can just denounce them.
And in case you're new to Bitcoin (I was), here's what Wikipedia has to say about it:
Bitcoin (sign: BTC) is a decentralized digital currency based on an open-source, peer-to-peer internet protocol. It was introduced by a pseudonymous developer named Satoshi Nakamoto in 2009.[8][1]
Internationally, bitcoins can be exchanged by personal computer directly through a wallet file or a website without an intermediate financial institution.[9] In trade, one bitcoin is subdivided into 100-million smaller units called satoshis.[4] There is a hard limit of 21-million bitcoins in total, which are released at a scheduled rate until the year 2140.[10]
Unlike most currencies, bitcoin does not rely on a central issuer, like a central bank or government. Instead, bitcoin relies solely on its software and the peer-to-peer network it builds. To manage funds, it uses a transaction log distributed across its peer-to-peer computer network to record transactions, verify them and prevent double spending. The verification process awards effective bitcoin nodes or "bitcoin miners" with a limited release of bitcoins and transaction fees (if any). This process requires intense computing power, electricity and significant investment as it solves SHA256 hashes through bruteforce to verify transactions and add them to the network's transaction log.
Bitcoin is the most widely used alternative currency:[11][3] As of March 2013, the monetary base of bitcoin is valued at over 400 million US dollars.[12][13]