Preface: Bitcoin is as much a speculative asset as a medium of exchange in today’s economy. While the Federal Reserve has no governance over the BitCoin exchange as such, as a digital cryptocurrency, its exchange value rises and falls on marketplace whims and traders.
Bitcoins in Business
Credit: Donald J. Sauder, CPA | CVA
Money or cash in the early days of Colonial America was denominated mostly in pounds, shillings, and pence, with values of exchange varying from colony to colony. For instance, a Pennsylvania pound value was not the same trade exchange value as a Massachusetts pound.
While paper money began circulating circa 1690 in early American, it initially financed ventures like King William’s War and other sovereign conflicts. In 1776 Adam Smith futilely criticized paper bills of credit in his famous work, The Wealth of Nations.
We’ve advanced past sophisticated plastic cards of credits of the 1990s to the developing world of Bitcoin and the cryptocurrency world.
Although the paper currency has historically been driven from a perspective of financing government defense departments, today the history of the Quaker faiths short-term opposition from at least one Yearly Meeting towards the Continentals currency for reasons of its purpose associated with taxes to pay for the war, has long been forgotten by pacifists. And, so today, the world of America is entirely bought into the “Dollar.”
The business community in American and the World, today transactions solely in dollars, accounting is in dollars even though a few businesses have foreign exchange considerations. We’ve advanced past sophisticated plastic cards of credits of the 1990s to the developing world of Bitcoin and the cryptocurrency world. Transactions in physical coin(s) are facing the final curtain, let’s say “Beam me up Scotty!”
BitCoin was the early invention of cryptocurrency introduced to around 2009 to the business community.
For those who vaguely familiar with Bitcoin, it is a cryptocurrency. That is a decentralized digital currency without a central bank or single administrator that transacts on a peer-to-peer network with no need for intermediaries. Transactions with cryptocurrencies are verified with network nodes through cryptography and listed in public ledgers called blockchain. BitCoin was the early invention of cryptocurrency introduced to around 2009 to the business community. Bitcoin is name for a brand of cryptocurrency like US Dollar, Canadian Dollar, Euro, etc.
Bitcoins are not printed or minted as is typical legal tender. Bitcoins are developed from a process called mining. Mining is essentially a process of computer solving mathematical questions to earn “grams of Bitcoin.” The mining process requires substantial computer capacity, hence high electric consumption. The known and planned and charted course concludes the Bitcoin mine at 21,000,000 BitCoins. Today computers have mined around 17m of those Bitcoins and math equations required are consuming “a lot” of electricity.
Like many exciting stories in early currency developments, the developer of Bitcoin Satoshi Nakamoto mined about a million Bitcoins himself in the early days before handing the network to Gavin Andresen.
Like many exciting stories in early currency developments, the developer of BitCoin Satoshi Nakamoto mined about a million BitCoins himself in the early days before handing the network to Gavin Andresen. Nakamoto claims his Bitcoin wallet disappeared when he had his computer repaired one day, and his wallet in the laptop went with a 1,000,000+ of Bitcoins.
Warren Buffet, one of the world’s richer men, is quoted as saying “Bitcoin has no unique value at all. It doesn’t produce anything. You can stare at it all day, and no little bitcoins come out. It’s a delusion.” He goes on to say, “Cryptocurrencies will come to bad endings… If you buy something like bitcoin or some cryptocurrency, you don’t have anything that has produced anything. You’re just hoping the next guy pays more.” Everyone is entitled to an opinion, and Buffet admits, “I was too dumb to realize. I did not think [Bezos] could succeed on the scale he has… [We] miss a lot of things, and we’ll keep doing it.”
Bitcoin is as much a speculative asset as a medium of exchange in today’s economy. While the Federal Reserve has no governance over the BitCoin exchange as such, as a digital cryptocurrency, its exchange value rises and falls on marketplace whims and traders. With a price in 2013 of $13.30 per coin and $770 in 2014, Bitcoin today is above $10,000 per coin exchange value to the US Dollar. On December 17, 2017, the price was an all-time high of $19,783.06 per coin.
Whether Bitcoin was named after a carefully saved hard-bitten coin for purposes of a purchasing a future meal, or more likely “digital coins,” every business person should have an opinion on the future of the cryptocurrency developments. Why? Because as economic trends continue they too will need make a serious decision on how they will transact when buying and selling products or services with the world. the decision to crypto or not to crypto may not be as easy it seemed in the early days.