Bitcoin – further research

Posted: January 2, 2014 in Monetary System, Paper money
Tags: , , , ,

As the price of this virtual currency continues it volatile rise, these recent articles give a more considered view of the mania around Bitcoin and seek to determine if it really can be considered an alternative to the current monetary system.

Since the last post on this issue, Bitcoin has received verbal endorsements from a US senate committee (CONfidence is essential to any created currency) and an investment by the Winklevoss twins, to name a few examples of its growing acceptance internationally. But there have also been a few negative developments – a ban by Chinese authorities being an example

My own thoughts welcome the perceived independance from any Central Bank or government authority, the absence of debt creation and its controlled circulation, but I have always been uncomfortable about the fact that it is still a form of ‘paper’ money with no intrinsic value, and the same mis-pricing mechanisms are available for the exchange of this ‘money’

Please read these two pieces discussing the downside risk of this digital currency – clearly a big pinch of salt is still needed when considering an investment here and opinion is becoming ever more divided

Bitcoin: The Rise and (Inevitable) Fall

Bitcoins: The second biggest Ponzi scheme in history

Related Ribanomics posts about Bitcoin;

Alternative Currencies: Bitcoins – is it just a fad?

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Comments
  1. Muslims really need to look at how bitcoin can help us avoid the usage of government fiat currencies and bank controlled payment systems. Gold and Silver are the best, but consider the situations where money has to be sent over long distances. Gold and silver do not work well in this scenario – you would have to trust a CORRUPTIBLE third party to move the money for you. But if you use bitcoin, NO TRUST IS REQUIRED. Money is sent directly from sender to receiver, no middleman at all! Please read what I wrote in this link:

    http://www.reddit.com/r/islam/comments/1tjgsp/bitcoin_fiat_and_islam/

  2. Hey Moderator! I love your website, but how can we get in touch with you to suggest articles to be included? Do you have a twitter? Here is one that I think might be interesting: http://coinrepublic.com/bitcoin-for-islamic-finance-investment/

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