Silicon Valley is undoubtedly the technology capital of the U.S. The home of tech innovators such as Google, Facebook and Apple are trying to push a new technology into the world: Bitcoin.
Bitcoin is by no means a new technology — the digital currency has been around for years, slowly rising in value before reaching an all time high this past week, finishing at a value of over $800.
Applauded by many for their decentralized nature, lack of international boundaries and exchange rates, as well as an absence of bank fees, the Internet currency has skyrocketed in value since being endorsed by top hedge fund managers and financial analysts all over the country.
While Bitcoin has many benefits and shows a promising future for Internet-based cryptocurrencies, the currency falls short in more ways than it excels.
Bitcoin’s biggest strength is that it is untaxable, decentralized and impossible to regulate. However shiny Bitcoin may seem, it is volatile (at best) and the worst part is that it is a currency with which you actually can’t buy anything.
Bitcoins rose to popularity as a means of buying drugs and other black-market commodities on the web via sites such as the Silk Road, and in a strange turn of events, the currency has government approval. After the government seizure of the Silk Road and their massive Bitcoin hoard, the currency may be overhyped and aren’t all that useful as means of purchasing.
What it is good for is speculation and investment, which is exactly how the currency leapt from a value of $150 to almost $900 over the course of the past two months. Investors and stockbrokers see Bitcoin as a gold mine. After all, what isn’t alluring about a currency with no regulations and a rising value?
However, there is an apparent Bitcoin bubble that is bound to burst — another problem with investing in Bitcoins, because there is legitimately nothing backing them.
It is a fiat currency in the most simple of terms: the digital currency is created by supercomputers racing to crack codes. The only real reason Bitcoin is such a hot commodity right now is because of public attention and awareness.
Even though the concept of an international and decentralized currency is remarkable and would complement the world of online commerce, Bitcoins are not the answer.
Despite all the hype and excitement, Bitcoin has been jinxed by premature success. The child-star of cryptocurrencies, Bitcoin has had its fifteen minutes of fame and has introduced the world to the exciting and promising future of digitally based currencies, but that doesn’t mean it will last.
Reach the columnist at jpbohann@asu.edu or follow him on Twitter @jay_boha.
