Thursday 4th July

I keep reading little snippets about Bitcoin.  To be honest the whole idea sounds daft.  It is ostensibly an internet or virtual currency, with which one could (in theory) buy and sell things safely.  But it is a currency which has never existed and never been earned; there will never actually be any bitcoins or notes.  Have I lost you yet?

Of course most actual currencies do not exist, not in their entirety.  The vast majority of dollars or pounds are not in notes but in numbers swirling around the worlds computers.  And despite the promise on the back of the banknote in reality if everyone tried to ‘cash in’ their money (for what exactly) at the same time the currency would collapse.  Sterling, Dollars, Euro’s and all the rest retain their value both relative to each other and to the price of goods because of confidence.  It is the knowledge we have that a pound will buy roughly the same amount of say, food, tomorrow as it does today that gives us the confidence to leave some in the bank or our pockets and not rush out and buy carrots.

But Bitcoin has never existed.  There have just been so many that have been ‘invented’ on the internet and investors are invited to purchase them with ‘real’ money and trade them.  The price has fluctuated wildly from 13 to over 200 dollars and back now at 90.  So in essence it is a gamble, a huge game of pass the parcel where as long as you sell your Bitcoins on before the music stops all will be well.  And it may do spectacularly well, or die a death.

Whether it will prevail and eventually we all use Bitcoin instead of pounds and dollars is a longer shot.  In essence why not?   At least the value of bitcoin would be determined by a collective agreement, or market jitters or just speculation rather than being manipulated by Governments around the world.   I haven’t even decided myself if it is a good idea or not but I am watching developments.  I want to see if it can fly first before attempting boarding.