Let’s get this out of the way early: Scrooge McDuck was my childhood hero, the undisputed best-dressed cartoon on television, and chief inspiration for this blog. I have dedicated a sizable portion of my life to living out my dream of treading in colossal mounds of money like it’s a green tea bubble bath – and I’m notalone.
Rather than defend my grandiose fantasy or uppity-feathered idol, I’m proposing a way for us all to be swimming in monetary mountains very soon (at least digital ones): Bitcoins.
Bitcoins are a kind of online, open-source currency whose value is not backed by any precious metal, tradable commodity, or national economy – making it essentially decentralized with respect to the international market.
The “coins” are produced by powerful computers deciphering dizzying algorithms and “mining” for returns. As more coins are uncovered and introduced to the market, the more complex the mathematic equations become, regulating the supply and maintaining the currency’s value. This money is then traded online through its own quasi-exchange and distributed to individual accounts. Funds can ultimately be accessed through personal computers and smartphone apps.
This advanced technological cash, however, should not be reserved for computer science majors or Wall Street wizards. Here are five reasons why anyone with a smartphone and a dollar should be investing in Bitcoins:
1. The rest of your life is digital; why not your money?
Our social interactions, entertainment (I can and do watch episodes of DuckTales on YouTube) and primary channels of information are online, so it makes perfect sense for our finances to follow. Sure it may put street muggers and remaining toll collectors out of business, but I’m all for ditching my bulky wallet in favor of a 5 MB app. (Bonus benefit: skinny jeans would soon become a staple of my wardrobe.)
2. Its value is rising as traditional forms of currency are diminishing.
I’d like to get Paul Krugman, Ben Bernanke, the ghost of Alexander Hamilton and Donald Trump together in a room and propose the following question: Isn’t it time we stop blaming our economic deficiencies on politicians and banks and indict the mostly arbitrary and outdated varieties of currency we continue to use? The international economy should modernize with the rest of developed societies. It’s time to ditch gold for every use except creating jewelry and sculpting sink faucets for hip-hop artists.
3. Become rich!
A quick history: in January 2012, a single Bitcoin was valued at $7.20, then climbed to $140 by the first week of April 2013, until peaking at $266 just a few days later. That equates to a 3,600% value increase in 15 months. Does anyone else see the potential?
We can’t all be Gordon Geckos, but there’s money to be made here, folks – and it’s the computer generation that’s spearheading the revolution. Plus, I really like the idea of college kids tapping into their inner 19th century prospectors and digitally mining for gold.
4. Get drunk with Bitcoins.
An April 10th Yahoo article reported that Manhattan bar EVR recently began accepting Bitcoins from customers to pay tabs and tip their waitresses. In fact, the owner even prefers Bitcoin payments to credit cards due to their significantly lower fees (1%-2% for the former, 3%-5% for the latter). As the digital currency spreads in popularity – possibly aided by a capable Internet marketing company – so too will the volume of merchants who accept Bitcoins right alongside cash, checks and plastic.
5. Don’t be repelled by the volatility.
In fact, embrace it. Bitcoins have gotten a pretty nasty rap recently after experiencing a sudden 45% drop in just a few days, causing the market to temporarily halt trading. A striking decline in value such as this does warrant further examination, but not the litany of alarmed scrutiny it has received. As I previously mentioned, the high water mark of $266 was a result of a nearly 100% spike from the previous week. It’s my guess that a significant portion of those who just lost a lot were playing with house money from the astronomical gains they enjoyed just a few days earlier.
Volatility is part of the game, and in a way it mirrors the hyper-changing world of technology itself. Bitcoin prices become obsolete quicker than each of my Apple devices. It’s a developing currency in an independent market with seemingly no regulations or administrative oversight. It was introduced just four years ago by ambitious tech-savvy financiers who simply envisioned a wallet-less world. Its value is fueled by a growing mass of people who share a similar desire and believe in money’s natural progression to the digital world.
Regarding Bitcoins as an inflated bubble or fleeting fad is, in effect, betting against the digitization of yet another aspect of our lives. An examination of Western culture over the past twenty years has the odds stacked sky high against such a bet. And though I’m not draining my bank accounts and reinvesting all my money in digital dollars just yet, I am buying into the idea of online currency and keeping a close eye on the development of this burgeoning market. Above all else, it’s simply more sanitary than bathing in actual gold, and I’ll contend that ol’ Scrooge would approve.