There’s no denying the rise of Bitcoin has been as amusing as it has been interesting. A quasi-anonymous, internet-spawned currency that shoots up to a price of $US32 is captivating. But the honeymoon is over and Bitcoin is falling. Fast.
After tumbling to a price of $US7, the Atlantic’s Nicholas Jackson points out the biggest problem with Bitcoin: it’s founded upon nothing. Absolutely nothing.
The problem with Bitcoins is the same thing that people love about Bitcoins: They leave no trace. It takes an incredible amount of computing power to create new Bitcoins with a PC (you can also, of course, just buy them on an exchange, which is what most people using them do). And a complicated algorithm keeps the total supply steady. Once these digital coins are created, they’re still just a handful of bits and bytes, a little piece of encrypted code. There is no fundamental value.
Some will argue in favour of Bitcoin because the basic concept of currency is relative and arbitrary. But even so, most prominent forms of currency are backed by some form of insurance. That might come in the form of something like gold, or a government institution, like the FDIC.
Bitcoin lacks this. Bitcoin’s keepers argue that gold is also relative and arbitrary. But gold has been an object of value for thousands of years. It’s spanned entire generations. I’m fairly certain your great-grandparents or great-grandchildren won’t find any inherent value in a digital file. And the pro-Bitcoin masses argue that a centralized currency means that you have less control over your money. But, if Bitcoin bottoms out, you’re left with nothing.
That’s not to say that Bitcoin doesn’t have value as an experiment. Maybe the currency of the future need not be backed by a government body at all. But it sure as hell better have better safeguards implemented into its core framework.
So Bitcoin, we’ll remember the good times, like the time that one guy who got heat stroke while mining Bitcoins. Or the time there was the great heist caper that shut down trading site Mt Gox for an entire day. The lulz were abundant. But frankly, it’s time for you to go. Farewell. [BitCoin Charts via The Atlantic]