Cryptocurrency

There has been an argument made that we have had plenty of distractions to keep us from paying attention to the economy. From the situation in Europe to the missing plane in East Asia, there are a lot of people that are looking at the ‘crisis of the week’ knowing full well than when all of the dust clears, when the wreckage is found and put back together we will have to deal with an economy that is devolving and what it may become in the near future.

Arguably, there seems to be a positive outcome of the shaky economy and that is the birth of cryptocurrency.

Bitcoin at the moment has captured the imagination of banks and investors. Bitcoin has the world’s largest virtual currency market capitalization at over $8 billion dollars. Apart from bitcoin, there are at least 100 other cryptocurrencies, ranging from Ripple at ($1.4 billion) and Litecoin ($453 million) — also at the high end – there is Germany’s Deutsche eMark ($106,000) and Grumpycoin ($88,000) at the low end. Even criminals have begun to diversify into homemade cryptocurrencies.

There is also a cryptocurrency called Mazacoin that was created by Payu Harris in hopes that the Lakota can use it in order to have greater independence.

The question is: does the boom in cryptocurrency indicate that people want to become independent of the almighty dollar?

There are many people that agree that while we are seeing successes and failures with cryptocurrency that the dollar will eventually go the way of digital.

InformationWeek reports: “According to former Central Intelligence Agency CTO Gus Hunt, in the future, the dollar could well become a crypto currency. “Government’s going to learn from Bitcoin, and all the official government currencies are going to become crypto currencies themselves,” he said during a recent panel discussion in San Francisco hosted by information security firm eSentire, for which he sits on the board of advisers.”

Others are saying that bitcoin will do for digital currency what Napster did for downloading music.

It is creating the format for which all digital dollars will be distributed.

Some people are not aware of the power of bitcoin and how it has revolutionized safe digital currency and transactions. From an evolutionary standpoint, bitcoin is the starting point and the example that many other digital moneys will be created and distributed. However, there are those that believe that there needs to be a central bank that distributes digital currency.

Focusing on bitcoin as the bellwether is for the moment interesting and it seems that it is the most popular, however technology observers are wondering if that will stay that way or if it will change over time.

Many of the technocrats say that they can compare it to how search engines and social media changed over time. Many of us remember search engines like Alta Vista and HotBot were replaced by Google. Old timers remember how Netscape and Windows were fighting for browser superiority. MySpace was taken down by Facebook and now Bing is competing with Google for another go round.

Is this what will happen with bitcoin ?

It is important to note that while bitcoin is relatively new, being aware of what it does and what it means for the future is an imperative in the economic future that awaits.

Much of what we see as positive attributes, format and platform of bitcoin is something that is to be considered as a foundation for future cryptocurrency.

Bitcoin’s attributes consist of the block-chain system, partial anonymity, and overall system integrity are raising the questions over whether or not this is the way tomorrows government issued currency will work and how we will be able to get our money in the future.

While there are detractors to the idea of cryptocurrency there has to be a more secure way of doing e-commerce that doesn’t include exposing credit card numbers and personal information. The markets are learning and improving. Hardware devices are appearing to make transactions more secure and safer.

E-commerce is convenient now, but most of the market is still gun-shy after hearing about identity theft and the recent breach of security at the Target online store during the Christmas shopping season.

E-currency or cryptocurrency is the first step in securing transactions on the Internet. The vision of cryptocurrency, most importantly bitcoin is to replace state-backed currencies with a digital version that’s tougher to forge.

It is a currency that holds its worth across international boundaries and it can be stored on your hard drive instead of in a bank.

As Forbes wrote in their article ‘Crypto Currency‘ from April 20, 2011: “perhaps most importantly to many of Bitcoin’s users–isn’t subject to the inflationary whim of whatever Federal Reserve chief decides to print more money.”

It is being said that the intentions are simple — and that this is an attempt to decentralize currency and have the people control it.

I recently acquired two bitcoins and wondered if my bank would know what to do with them. I ran a check in at least two periodicals, MarketWatch and Forbes. Both websites had reported that my bank was one of the pioneers in welcoming the exchange of bitcoin into regular dollars.

I made a phone call to my local branch and, while the teller that answered knew about the value of bitcoin, the bank manager refused to even speak with me about bitcoin and said that I would have to call the main branch in Chicago for help.

I then phoned the main branch. I was met with a customer service representative that told me that he had never heard of bitcoin and that it is a scam. I asked if I could speak with a manager and he refused to allow me to speak to a manager because he said I was wasting his time. He asked me if I was playing a prank and I told him that I was dead serious and that I wanted to know why two well-known mainstream magazines were saying that my bank was friendly to bitcoin and that why he was being so incredulous.

I ended the call thinking that the guy probably thought I was giving him a rough time.

The incident reminded me of a story I read in the Baltimore Sun where a man tried to make a purchase at Best Buy store using $2 dollar bills. A 57 year-old man was arrested, handcuffed and taken to jail after clerks questioned the currency’s legitimacy and called police. The clerk actually refused the money and parked it with an ink pen to see if it was counterfeit.

The U.S. Secret Service even showed up to verify that the bills were legal tender.

As the Sun wrote, “according to a Baltimore County police arrest report, suspicions were roused when an employee noticed some smearing of ink. So the cops were called in. One officer noticed the bills ran in sequential order.”

Bitcoin, as with any other currency, is now sharing fame in the black market. Money is used for both legal and illegal transactions. Bitcoin has also been used effectively for illegal transactions as well.

Since bitcoins can be spent on the Internet without the use of a bank account, they offer a convenient system for anonymous purchases. There’s no centralized storage of funds, so accounts can’t be frozen by law enforcement or PayPal administrators.

Now before you start seeing this as a reason not to use bitcoin, law enforcement can’t stop dollar bills from being used for prostitution and the illegal drug trade either.

Currency is currency; however, cryptocurrency has a bit more anonymity associated with it.

As Investmentpedia writes: “Cryptocurrencies make it easier to transfer funds between two parties in transactions; these transfers are facilitated through the use of public and private keys for security purposes. These fund transfers are done with minimal processing fees, enabling users to avoid the steep fees charged by most banks and financial institutions for wire transfers.

A major drawback of cryptocurrencies is that because they are virtual and do not have a central repository, a user’s digital cryptocurrency balance can be wiped out by a computer crash if a back-up copy of the holdings does not exist.

Since prices are based on supply and demand, the rate at which a cryptocurrency can be exchanged for another currency can fluctuate widely.”

The completely disruptive nature of bitcoin can be frightening for some people. In order to simplify the idea, it is important to stress that it’s a currency, it’s a transaction system, and it’s a commodity all at once.

It is a transaction system, a new and anonymous way to transfer money. It is a way to transfer money instantaneously and nearly free to any person in the world. The conversion process to fiat currency seems to be happening seamlessly and invisibly.

It allows a system of monetary value transfer that completely bypasses the current existing banking system. There are a lot of people who have expressed that they want to fight back against the Federal Reserve.

Cryptocurrency is a start.

If JP Morgan issues a report critical of bitcoin and Treasury Secretary Jack Lew and Federal Reserve Chairwoman Janet Yellen are against it as well, then perhaps it is something that may put their criminality at bay.

Joe Manchin, a senator from West Virginia, says cryptocurrency will harm hard-working Americans.

“Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.” — Sen. Joe Manchin

As we can see, it is apparent that bitcoin will be tarnished by those who wish to protect the parasitic legacy that the financial system has cherished for many years. Of course, those who have committed the crime of stealing from the American people will discourage the use of revolutionary technology that benefits the people.

Keep thinking that only politicians and central bankers are sophisticated enough to create valuable currency and handle it. They want us all to think small, to remain enslaved by the financial matrix that they have built and have kept to themselves.

At this point it is very comforting to know that there seems to be a solution to fighting back against the encroachment of the bankers and politicians that have destroyed our way of life through their greed.

While it is still new, cryptocurrency is a new arrow in our quiver. The question is how long will the honeymoon last and will this be the solution that will last and grow into a secure and relatively free system of exchange?