I’m going to talk about BitCoin today. I need to write more, and you write what you know, and lately I’ve been spending quite a bit of quality time with all things Bitcoin. Heck, you should all immediately forget about BitCoin (this is not the blog you are looking for) and leave me to my money grubbing ways.
But that’s not very nice, so I will proceed.
BitCoin is a new currency that is not associated with anything but the bits it’s made of. It doesn’t have a country, it doesn’t have a precious metal or commodity that backs it and it doesn’t have a sponsoring organization other than the loose collection of people that use it. BitCoin can be traded for various other currencies on exchanges that support trading BitCoin. Sign up with Trade Hill and I’ll get some kind of kickback. Trade Hill is not the only market, but it’s a big new player now that the incumbent “MtGox” has been handed their lunch by some hackers. If you’re interested in the BitCoin Market, the BitCoinCharts Markets is a good place to start. BitCoins have traded as high as $30 USD per BitCoin and after their recent crash (where MtGox was hacked) have rebounded to $15.50 (as-of-when I’m writing this).
But why another new currency? Why another new online money-wallet-payment thing? The simple answer is that some people don’t like how things are run right now. PayPal is rather autocratic, Byzantine and, many feel, out-of-touch. The credit card companies and their friends “The Banks” are even further from the online market … fundamentally not understanding micro-payments or even what people want online. Maybe the most compelling reason is that some of us would like some “cash” to use online. I don’t mean we want you to give us money (but feel free — really…), but “cash” as in simple and anonymous currency to be spent in without incurring payments to other businesses where the amount of money you have in your wallet is both yours (your money) and easy to spend without having a third party looking over your shoulder.
This is a very Libertarian concept. If you think about how you use your credit card, the fees are legion. You pay fees to have the card; you pay fees if you don’t pay your balance; you pay fees if you go over your limit and you pay lots more fees. The merchants are no better off: they pay fees to accept your payment; they pay more fees if your card is special; they pay fees just to have the machine to accept your payment. Debit cards are only slightly better and most other “newfangled” payment solutions may vary “how” you pay (touch, swipe, chip, etc), but not how many other people you pay (they are still wrought with fees).
Core to the Libertarian heart is the concept that while government has it’s uses (and in this case big business is grouped with the government), it is not required for the day-to-day interaction between people. Think about cash. If I give you a dollar, nobody gets a cut. You now have a dollar. If you an I have a dispute about the dollar or the product you sold for the dollar, we have to work it out ourselves. There is nobody to “charge back” the dollar. If you then give that dollar to someone else, there is no record that you got that dollar from me. Indeed that dollar can change hands dozens of times before it returns to the hands of the “government”.
Most of our currencies are backed by governments, but some examples of barter currencies exist… usually created by other companies. Currencies are no longer backed by gold or some other “real” thing — in that respect, BitCoin is very similar. They only have value in so much as you trust that you can spend them somewhere for something.
BitCoin tries very hard to be “cash.” You can’t spend it effectively without computers, but the design and implementation of BitCoin is fairly anonymous and generally free or at least cheap to form transactions. This is a very disruptive idea. Right now, you can’t move much cash without one or more governments knowing, but BitCoin is built to resist even the imposition of these types of restrictions. Every BitCoin transaction is public, but nobody knows whose transaction it is.
I’ve spent all this time talking about BitCoin without talking about what I’m doing with BitCoin. First of all, I’m mining. I don’t recomend mining … because if you start mining, I potentially make less money. The system at the right here has four ATI 5830 video cards in a single motherboard (with many fans). It draws about 775 watts, but it uses that power to generate about one billion hashes per second. For this, right now (at the current difficulty) I make about one BitCoin per day. I’ll let you know later if it was worth it. If you’re curious, the system is sitting on top of a Matrix 5000 UPS which powers the emergency lighting and computers in my house. Maybe I should post on that one day.
I’m also working on a site that sells computer hardware in exchange for bitcoins. I’m having a bit of trouble with the shopping cart, but watch BitCoin2go.com for future developments.
I suppose, at heart, I’m a bit of a Libertarian rather than a Conservative or a Liberal. I believe that people should be responsible for themselves and their actions and not living in a cocoon crafted for them by the state. Many aspects of the “nanny” state bother me greatly. Maybe I’ll rant on that more shortly.