The Bitcoin currency is attracting more media attention such as this CNN article on Bitcoin ATMs
. That had me wondering what exactly is Bitcoin. Is it intended for investors who fear their government printing too much money? Is it intended to be a virtual currency for online transactions?
I came across this article “The Bitcoin Bubble and the Future of Currency”
by Felix Salmon, a finance blogger at Reuters. This provides a good overview of Bitcoin and its history. There are probably more downsides with Bitcoins than upsides. Below are two excerpts from the article that do a good job at describing the motivations behind Bitcoin:
Bitcoins were designed to be – and, in many ways, are – the perfect digital currency: they’re frictionless, anonymous, and cryptographically astonishingly secure. For anybody who’s ever suffered the incompetence of a bank, or bristled at the fees involved in just spending money, either domestically or abroad – that is to say, for all of us – the promise of bitcoin is the holy grail of payments.
If you hold dollars, you’re trusting the US government not to destroy your wealth. Bitcoin, by contrast, is based on mistrust — it’s specifically designed so that it’s every man for himself.