It can be difficult to predict how valuable a currency will be in the future: the franc, or even the drachma, were a good value in the 90s and are now gone, replaced by the euro; similarly the Deutsche mark, which itself replaced the Ostmark of East Germany. Gold has remained valuable since 600 BC, and the American dollar has been valuable since 1792 (although it used to be pegged to 24 grams of silver, which today is worth about $10, so you could say its value has fallen), but cowry shells, for example, which were used as currency in West Africa, India, and China, are currently worth more as craft supplies than as currency. (It’s a bit tough to equate values then and now, but one way of doing it is to note that, in the 17th century, a chicken in Africa was worth 25 cowries; today an average wholesale five-pound chicken is worth $5, making a 17th century cowry the equivalent of 20 cents, whereas wholesale cowry shells can be had for 1-4 cents today. Economists, please feel free to tell me a better way.)
Bitcoin is going up; blame the internet
So, money changes. But ask anyone about Bitcoin, the digital “cryptocurrency” based on cryptographic hashing of transaction blocks using the algorithm SHA-256, and you’re likely to hear that it’s too volatile. The Bitcoin boom and bust of 2013-2014 made some investors rich, and regressed to a baseline, but the story of Bitcoin isn’t over: a recent spike has crypto speculators watching the coin again; I won’t be retiring on my modest 0.02 BTC, but a 42% increase over one week isn’t shabby.
Of course, for a currency whose primary draw is its lack of governmental control, there has been a lot of government intervention in bitcoin, from the bankruptcy filings of Tokyo-based Mount Gox to the US seizure of the Silk Road’s substantial assets. If you want to buy a cryptocurrency relatively ignored by the powers that be, you may be better off with Dogecoin. For those of you who have dismissed internet memes in the past, it may be sobering to know that Dogecoin has a market cap of $12.5M. Very wealth. So value.
There's more to the blockchain than Bitcoin
Most of the excitement around Bitcoin has transferred from the potential to make a fortune to the potential for its underlying technology, the blockchain. The blockchain is a public, verifiable record of transactions that uses the power of crowds to promulgate itself, thereby executing trades and transactions that can be described by basic logic: you can use the blockchain to draw up a contract, or to execute a will, for example. If we believe that computers are going to take over for our legal system, the blockchain is a way of keeping them honest. One particularly interesting proposed use for the blockchain is to record prescription drugs: any pharmacy could verify that a prescription was accurate, unique, and assigned to the person presenting it.
Will Bitcoin go the way of the Beanie Baby?
When you think of everything we use money for on the internet, from Paypal to micropayments to in-game purchases like jewels and Facebook "presents", a digital currency that can easily be traded across international borders makes a lot of sense. You don't need to understand the mathematics behind Bitcoin mining to use Bitcoin (just as you don't need to understand how the Federal Reserve works to use dollars), but the technological aspects of Bitcoin are reassuring to some. If mining Bitcoin decreases in popularity, its conversion values may fall, but the actual coin, my 0.02 BTC, won't disappear unless I lose my account details. Currently, the total amount of Bitcoin ever available is capped--though that could change, if the community overthrows its original rules--meaning Bitcoin could be like gold: it may go "underground", but it will outlast many a government.
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