BitCoin – The true free market money

If you own BitCoins or know what it is you probably won’t find this post very interesting but if you clicked “No” then by all means, read on.

What is BitCoin?

BitCoin (BTC) is a legitimate, free market cryptographic currency http://en.wikipedia.org/wiki/Bitcoin

What are its characteristics?

• It is resilient to counterfeiting by means of mathematic rules it is based on.
• It is widely accepted on the internet and it still grows in popularity.
• It supports anonymity just like cash if you use it properly i.e. for every transaction you create new BitCoin address.
• It has stable money supply which means that on average, every 10 minutes 50 BTC is created.
• It is tax free- no one can force you to pay taxes on it because it is free market and not government money

BTC is created by users that use BitCoin software client to verify past transactions. In short, the more you use BitCoin the more secure it gets and the more BitCoin there is in the system. Total limit for BitCoins is 21 million and now there is just below 7 million BTC in the market. Over time, as we approach this 21 million limit, less and less BTC will be created so BitCoin will get more stable in price.

How is BitCoin different from any other national or virtual currency?

Since BitCoin is controlled by everyone that use it, it effectively means it is controlled by no one really.
This is a good thing.

It means that no single entity or group of entities can influence how many BTC gets created and how BTC are traded or used. This way BitCoin cannot be monopolized by dishonest people or organizations.

Furthermore the client that is used for making payments is open source meaning that any one can make his own and offer new services on top of it. Recently Google announced its BitCoin client that can be run on mobile phones.

This opens whole new possibilities and further increases recognition of BitCoin and supports integrity and value of the currency.

BitCoin market

Every successful currency needs a foreign exchange market. BitCoin already has community built, completely government independent international FX market: http://bitcoincharts.com/markets/ and demand for BitCoins is rising rapidly. When you factor in falling demand for worthless government currencies it rises even faster.

BitCoin was created back in 2009 but only recently got media attention. Since then for the last 2 months it has risen over 20 fold that is 20000%. It’s just hard to imagine but it’s true. Of course some people are saying this is a bubble but just like with gold and silver – how can you have a bubble if nobody owns it? :)

I own all the contrarian, classic investment like gold, silver, mining & energy stocks etc. (thanks to Peter Shiff‘s sound economic forecasts) and now I’ve included BTC in my portfolio. This is just another inflation hedge but it is created by free market forces of the Internet community. This is the ultimate way to go for a successful currency.

Why do I like BitCoin so much?

I love freedom and BitCoin is the closest to freedom money you can get at the moment.

From what I’ve read governments are already trying to dispose of BitCoin (which is impossible because of the way the system is designed) and PayPal and eBay have suspended accounts of people who were trading BTC. Nobody likes competition and governments just can’t stand it.

Gold/silver is also freedom money but currently it’s rather hard to buy something with it. With BitCoin it’s doable already:

If you are still worried about demand for your BitCoins then let me tell you this. I own a small consulting company Tendersoft so if you want to work with me I’ll gladly accept your BitCoins in exchange for my services. No problem :)

There are many more services that can be purchased with BTC, here is a quick list.

One thing that pops out sometimes in the mainstream media or ultra-conservative minds is that BTC is a way to trick people. Nothing could be further from the truth. The only money that facilitates robbing you from your purchasing power is the government money because it can be printed without a limit. What is your trillion dollars/euros etc. worth if a box of matches costs 5 trillion (5*10^12), bread 50 trillion (5*10^13) and house 5 quintillion (5*10^18). Don’t forget that inflation is theft.

In fact BitCoin is the first currency designed to be deflationary. Prices measured in BTC will fall constantly so if you are poor you can still afford to pay for food, energy and house you live in. Instead of adding zeros before dot (.) 1.00 like 10.00, 100.00, 1000.00… etc. they can be added after the dot like .1, .01, .001, .0001… etc.

This is the way free market works i.e. with increased efficiency and wealth, prices for consumers fall. Only when there is no growth or there is too much government money the prices rise. But they rise faster than people earn them so most people get poorer, not wealthier. BitCoin helps to prevent this by not creating too much money too quickly.

Since I’m a computer science engineer I can safely say that BitCoin is legitimate. In fact it is probably the missing link between gold, silver and todays secure digital payments. So don’t sell your gold or silver if you own any. You just might want to look to BitCoin to further reduce your risk of government default through inflation.

So how can I start using BitCoins?

1. First of all, download and install BitCoin client here.
2. Read more on the subject here.
3. If then you decide to buy some BTC:
   • If you have USD or some other international currency, you can go to mt.gox. It takes few days for the money to come through but once it does you are free to buy some BTC.
   • If you have worthless Polish currency i.e. PLN you can go to Bitomat.pl and since they use mBank accounts you should be able to trade BTC rather quickly.

Please be advised that BTC market is extremely efficient so when many people trade one way it can have violent price moves – as much to the up side, as to the down side. Overall the trend is up but there will necessary be a lot of corrections along the way so try not to put all your money at once. It’s almost the same strategy as with gold or silver.

Remember, investors do not speculate, they just gradually move away from the flawed government currencies. Act smart and free market will reward you.