Issue 43.16
Currency is a mode of exchanging value with other people. Historically, people would exchange things that had actual value such as salt, food, animals, spices, textiles, etc. The most desired currency was precious metals or gems because they were stable (didn’t die or spoil on the trip) and valued by people in all countries where things such as salt might be rare in one area of the world and common in another, thus making the value confusing. Traders made fortunes by taking things that were common in one area such as spices or teas or textiles from India or Asia to Europe or tobacco from the new world to the old world.
In our day, people have gotten used to the convenience of paper money that has no real value, but is accepted by most as representing value that can be exchanged. At one time in the US, paper money was exchangeable for gold or silver, but that time has gone. Now if the perceived value of paper money goes away because of inflation, people will be left with lots of worthless paper. This happened in the Soviet Union when some of the countries governments there collapsed and in Germany after the war where a wheelbarrow full of paper money might buy you a loaf of bread.
The rise of credit and debit cards that have put another layer between the person and the actual value. All that is exchanged is a transfer of value in the computers between one person or company and another. Companies like paypal and square have allowed people to transfer money to each other without involving competing banks. Meanwhile, the government is getting more and more involved in every type of transaction. The banks have to report to the government if any large sums are moved by individuals or companies. Bank records as well as paypal, square, credit card and other types of transfers can be looked at by the government. From that they can decide if you are paying enough taxes or may perhaps be involved in terrorism or criminal enterprises. This process has led to perfectly honest people having their “currency” placed on hold where they can’t access it or even confiscated by the government when they are even suspected of doing something wrong.
A few years ago, a Japanese businessman created a new type of currency based on computer encryption systems. The full explanation is too complicated and time consuming to get into here, but suffice it to say that, this system creates long strings of characters that are impossible to “hack” or figure out. Each of these strings were considered one Bitcoin and there are a limited number of them that are creatable by this process. You can buy one of these “coins” and no one (not even the government) can know you have them unless you tell people. You can use them to buy things from others who have a bitcoin account by transferring it to them privately or you can sell your coins to get cash. Because it is a commodity and there are a limited supply of them, the value tends to rise over time. When created, a bitcoin was worth one US dollar. Within two years, the value rose to around $1200. The value dropped shortly after hitting that high point, but is currently worth about $650 US.
Because the value fluctuates, this may not be for you. However, if you value your privacy and are willing to take a risk, bitcoin is a way to keep some of your money and purchases private and only let those you trust know you have it. The only things that are of concern are that, if the government figures out a way to track it (which at this point seems unlikely), that privacy could disappear. Also, if the internet or the bitcoin computers (servers) ever are shut down, you might lose all or part of the investment.
It’s an intriguing project and definitely not for everyone, but I wanted you to know about it in case it might meet your needs. As, always, do your homework first, and always remember to have a backup of anything important.
Shaun McCausland has worked in the computer industry for over 33 years, 26 years of it locally with Bits ‘N’ Bytes and Musicomp and currently works as a computer consultant. If you have questions you can reach him at 435-668-7118 or shaun@musicomp.net.