Whether you fancy Bitcoin, the online cryptocurrency or not, it has resurfaced from the depths of the news cycle and risen to the forefront of our attention once again. Recently one Bitcoin was worth around $60, but now the price has skyrocketed to about $92 per coin. Furthermore, around 11 million Bitcoins are currently in circulation, which means that the total worth of the pseudo-currency is around one billion dollars.
Aside from the currency essentially being “free” to generate — in that rather than work at a traditional job, you leave a computer (or really, a botnet) running mining for the coins — economists don’t quite understand why the currency has risen to the forefront. As Lawrence White, an economist and teacher at George Mason University explains, Bitcoin was not introduced like a new currency is traditionally introduced, and thus should be having a rough start, rather than now being worth over one billion dollars. The appeal of an anonymous currency you can generate without having to perform some kind of labor, though, is without question.
What’s even more confusing about the currency is that you can’t really buy much with it yet. Due to the anonymous nature of the currency, you can famously buy nefarious products and services — most prominently, drugs — but you can’t walk into a grocery store and buy your month’s worth of yogurt and tuna. There are a handful of hip coffee shops that accept the currency here and there, and a few services on the web that will exchange your Bitcoins with gift certificates or buy you pizza, but by and large, you simply can’t use Bitcoins in a public setting.
The very nature of the currency may also turn off big-time investors. All bank accounts can be hacked, sure, but traditional banks offer some kind of insurance, whereas if your Bitcoins are stolen, you’re out of luck.
Whether or not Bitcoin truly catches on in a widespread way, it certainly has hit a milestone. Being worth over one billion dollars isn’t something to scoff at, even if Bitcoin is more of an amusing thing you read about on the internet than a currency you would ever take seriously.
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