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The Truth About the Fact: An International Journal of Literary Nonfiction

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Sunday, February 9, 2014

My experience with Bitcoin

Since I learned about Bitcoin about a year ago, I have been very intrigued by the cryptocurrency. It is not accepted by many businesses and establishments yet— although this is slowly changing— but this hasn’t mattered in my eyes. I am just intrigued by a currency that is worth dramatically more than the dollar, could possibly usurp the dollar, and that isn’t controlled by any nation. (Although I consider myself to be fairly apolitical, I definitely have a libertarian streak that shows at times). Its historic volatility, while unsettling to many, is something I find attractive; after all, I am rather volatile myself.

With this being said, I own less than one-hundredth of a Bitcoin, and I have never tried mining Bitcoins— mining involves computer skills and processing power that I don’t currently possess. The little currency that I have I obtained through Bitcoin faucets, which are essentially free sites that “leak” currency— thus their being called faucets. In other words, I like the idea of Bitcoin, but I haven’t really put too much effort into trying to earn them myself.

Part of the reason that I am blogging about Bitcoin is because I am curious as to whether other people have mined— or even heard of it, for that matter. I would like to know other people’s experiences, however limited. I want to know why people have or haven’t used Bitcoin, and how they found out about it. I was going to write a comprehensive paper about this topic for another one of my other journalism courses, but at this point the scope of this topic may be limited to this blog.

Speaking of the uses of Bitcoin, I do want to clarify that I think that the currency ideally should easily be able to be used for purposes that are legal. These can still include somewhat nefarious activities— recent articles have highlighted that two Las Vegas casinos will be accepting the currency— but they are still more legitimate than the dealings of sites such as the Silk Road, where drugs and guns of all varieties filled the marketplace. (The site was recently shuttered). I can’t wait for the day when I can pay for my food, my rent, my clothes, my entertainment, with Bitcoin, if that day ever comes.

Although there are the aforementioned reasons that I like Bitcoin, one thing that I don’t like is the fact that it is not completely anonymous, despite being advertised as such— all transactions are kept publicly online. This may sound picky, but I would prefer private transactions to be private— one reason being that I don’t like the idea of the government being able to intervene. The less public that records are, the better of a chance I would eventually be accused of tax evasion by the IRS for a currency that I truly believe transcends the borders of sovereign states. And I’m just a private person in general; even though I wouldn’t plan to purchase anything illegal, I’d rather have my purchases be kept completely anonymous to others, much like they are if I purchase something using my credit card or cash.

Bitcoin has other “fatal flaws” that make people think it may not ever spread like wildfire. First of all, you can’t reverse transactions, according to an article by Wired titled “Once You Use Bitcoin You Can’t Go ‘Back’— And That’s Its Fatal Flaw.” This means that if you don’t receive an item or service, you can’t just get a refund; you lost your money. There has also been talk of an elite few who own a majority of the currency. People have been accused of hoarding Bitcoins— which would be a problem with any currency— and this will only get worse at the value increases, particularly once the cap for them being mined reaches its end. (Bitcoins are only distributed in a finite amount).

Due to the flaws with Bitcoin, and because I am honestly interested in any cryptocurrency, I do want to also briefly discuss the other options that are either available presently or are on the horizon. One currency being developed by individuals at John Hopkins University is called Zerocoin. It aims to solve the problem of there not being complete anonymity. Interestingly enough, the technology behind Zerocoin was initially intended to be used for Bitcoin, but the founders are now creating a separate currency because the Bitcoin founders do not want their currency to appear as if it is untraceable to the Feds. I also have fooled around a bit with Litecoin and Dogecoin, while I’ve also read about Coinye West— yes, that’s a currency whose name is a parody of the rapper. Many of these currencies have a potential leg up in that they have a higher market capitalization— more currency will be “minted.” They also have a lot of room for growth— who knows if Bitcoin will ever again surpass the $1,200 mark it passed this past November.

All in all, Bitcoin is probably not going to gain widespread social acceptance and recognition, at least until it is a lot more intuitive and easy-to-use. A Bitcoin can be worth a lot of money, but if people don’t “get it”, it won’t be ubiquitous. I personally think that if they are able to improve the system, or if someone else is with a different currency, it may be the way of the future. (I definitely know that I want to be able to be refunded should I be scammed or whatnot). Regardless of what happens, I know that I’ll be closely monitoring the situation.

-- Daniel Steingold



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