Using the cutting edge in cryptography technology Bitcoin has achieved something long thought to be impossible: a decentralized currency. The process for achieving this is long and technical, but suffice it to say that Bitcoin has created a one of a kind currency system backed by nothing but solid math.
Some may disagree with the word “secure”, as numerous hacking thefts have resulted in the closure of several large Bitcoin businesses over the last few months. However, the Bitcoin protocol itself is ruthlessly secure. These thefts were only possible due to carelessness or incompetence on the part of the victims. Still, many expect a currency system to be more idiot proof in its security features. And as its development matures, Bitcoin likely will be.
Still being an experimental project, the developers of Bitcoin have warned the public on numerous occasions not to put money into Bitcoin that they cant’t afford to lose. Trial and error is the only way to improve, and error here could be financially devastating for those who put too many of their eggs in the Bitcoin basket.
Currently Bitcoin developers are working on multi-signature security. Described as thus:
They are kind of like if you took all of the paper money in your wallet and then tore it in half and put half in your safe deposit box and kept the other half in your house. A robber would have to break into both your house and your safe deposit box to steal your money.
To steal your Bitcoins, thieves would have to break into both your computer or smartphone and your bank. And, it would be impossible for anybody at the bank to steal them without first breaking into your computer.
But even with Bitcoin offering more idiot-proof security options, the platform’s success is no guarantee. The biggest variable being whether the world wants or needs a decentralized currency system. If Bitcoin offers no benefits to the average person, it will never become more than a fringe platform.
On the other hand, if governments’ current issues with retaining the value of their currencies increase and begin to negatively affect the public, there may be great demand for a global decentralized currency. Though even if there is demand for a decentralized currency, Bitcoin may be superseded by a superior project that learned from Bitcoin’s mistakes.
Regardless of what may lay in store for Bitcoin, the project deserves recognition for its contributions. Bitcoin is both a superb innovation with applications that go far beyond digital currency, and an experimental concept that could shake up the global currency world (or die with a whimper).
As far as treating the project as an investment, this is a terrible idea. Current security issues–if you can call them that–aside, the project’s future is impossible to predict
Unless you enjoy high risk investments and living on the edge, I recommend to avoid depositing anything but small amounts into Bitcoin. By trying to treat an experimental currency like it is a ponzi scheme, you’ll only end up turning it into one for yourself. That is to say: you’ll lose all your money.
My view on BitCoin as a currency is this: it’s a lot easier to change the system from the inside out, than from the outside in. I don’t support Bitcoin as a replacement for the international banking system, the IBS has its problems (doesn’t everything), but it’s not fundamentally flawed enough to replace wholesale. It needs incremental improvement, which is what has been happen since its inception, and what will continue to happen.