I’m writing about alt currencies for this month’s Garland Report Monthly, and Bitcoin is front and center. That’s why I love this analysis of how Bitcoin has become a global sensation, based on nothing but social construction – from the blog Deus Ex Machina.
Bitcoin, BTC (or $BCOIN on StockTwits) is a decentralized value transfer protocol.
It is an anarcho-capitalist wet dream with Neal Stephenson as narrator.
It is a Ponzi scheme, but so is the USD and financial capitalism.
It is used for illicit dealings, but so is the USD and financial capitalism.
It is highly speculative and risky, but so is the USD and financial capitalism.
It is NOT made out of thin air or backed by the threat of violence.
This isn’t like gold or Yen, but there is a tangible, material and real thing of value created by the Bitcoin network.
Fundamentally, BTC is a public transaction history wrapped in a hard math problem. Hard in the sense that it cannot be solved with reasonable funds in a meaningful amount of time using technology in the public domain without violating fundamental assumptions we make about physics, matter and energy.
I encourage you to go back and read The Glorious Bitcoin Freakout of 2013 and compare notes with all the “official” people who said months ago that Bitcoin was impossible because it was irrational.
“It’s a Ponzi scheme, but so is the USD.”
In the final analysis, if you are comfortable with a Ponzi scheme run by a creepy centralized cabal, you should be at least OK with a Ponzi scheme run by a creepy decentralized cabal. At least Bitcoin has guys good at math involved with it.