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BitCoins: The End of Cash? Maybe Not.

by Will Robertson (@willr123) Last year, the US treasury printed zero $10 bills, fewer $5 bills than it has in the last 30 years, and has a supply of unused $1 coins that’s worth $1billion. In our increasingly digital society, it’s no surprise that cash is finding itself less useful. Everything from shopping for groceries Read more

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by Will Robertson (@willr123)

Last year, the US treasury printed zero $10 bills, fewer $5 bills than it has in the last 30 years, and has a supply of unused $1 coins that’s worth $1billion. In our increasingly digital society, it’s no surprise that cash is finding itself less useful. Everything from shopping for groceries to paying bills can be done online now, leaving physical currency behind.

So what comes next? According to Jerry Brito of Time Magazines’s Techland blog, anarcho-currency Bitcoins may be how we start paying for our day-to-day necessities.

The current Bitcoin infrastructure is based on a whitepaper self-published by Satoshi Nakamoto, though he is no longer involved with the project. At it’s core, the focus of Bitcoin project is not so much anonymity as it is to have a currency maintained by it’s users rather than by a central body. Certainly a radical concept to say the least. Anyone can “print money” so long as they are they are willing to “mine blocks” (A process that gets harder every time more coins are made), and a public, yet pseudo-anonymous, record of all transactions is kept by everyone who uses the Bitcoin application.

While a total far-cry from any currently existing currency, believe it or not, the digital currency already has some serious traction. Today, you can pay for a Pita Sandwich at Meze Grill in midtown NYC with Bitcoins, or order a custom ornate cake from Oklahoma cake shop Sugar. Heck, The Arms Locker in Pittsburgh, PA will sell you a bullpup AK-47 for Bitcoins (After a proper background check of course). A page on the Bitcoin wiki lists all kinds of services, both on-line and off, that now accept Bitcoins. However, it’s not the listed services that have officials like Senators Charles Schumer of New York and Joe Manchin of West Virginia. After an article on Gawker detailing the process of buying illegal drugs on the internet using an underground website called Silk Road and Bitcoins, the two Senators sent an open letter to the Attorney General and the Head of the DEA, calling for both Silk Road and Bitcoins to be shut down.

While many Bitcoins advocates have compared this action to banning sterling because it might be used to purchase drugs, there’s no doubt that the currency is going to come under scrutiny in the coming months. But the government may not need to take action to instill distrust in Bitcoins. Irish Times reporter Danny O’Brien wrote that when he showed the currency to friends and family, their reaction would always be to question whether it was a scam or even legal. The biggest challenge Bitcoins are going to face before they are accepted in your local Duane Reede is convincing both businesses and individuals to trust in a monetary system that has no government backing and no physical collateral. However, with almost 95 million dollars of Bitcoins currently out in the wild, things are looking up for the digital currency.

 

 

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