Will Digital Money Ever Grow Up?

What is digital money or "cryptocurrency", you may only know by the name "BitCoin"?

Here is a definition:

• a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.

Money is ... complicated and has always been managed by the government of the country issuing the money.  Since the Bretton Woods agreement following World War II the United States Dollar has been the preferred money of the world, though it doesn't replace the local currency (yes that is a simplified statement).

What about money that knows no political boundaries?

Enter cryptocurrency, one example of which is the widely known "BitCoin".

This is a very immature technology that has enormous potential ramifications.  The power of this tech is growing.  With that growth and its impact it has gained the attention of law enforcement.

Here is the full story:

https://www.technologyreview.com/s/612147/new-yorks-damning-report-on-crypto-exchanges-will-be-good-for-the-industry/

Here is a snippet from the piece:

A fight is brewing over the future of the cryptocurrency exchange, and its outcome will figure prominently in how the industry evolves. On one side are the purists, who believe that crypto exchanges—the on- and off-ramps between the world of crypto and the traditional financial system—can and should remain free of government meddling. On the other side are government regulators, charged with protecting investors from fraud.

This week the New York attorney general’s office landed a powerful blow in favor of the regulators, with a new report that illuminates the shadowy inner workings of 10 popular cryptocurrency exchanges.

It kind of sounds like the inmates are running the asylum so to speak, for now.  If cryptocurrencies are going to grow up they'll need more adults in the room.

Happy Reading,

J.W. Gant

Bitcoins Courting, and Getting, Real Money

Think bitcoins aren't real?

The companies driving the concept are getting real money in funding.  This is a lot of money for VCs to throw around:

http://fortune.com/2015/01/20/coinbase-raises-75-million-in-largest-ever-vc-round-for-bitcoin-company/

Here is a snippet from that piece:

Coinbase has raised $75 million in Series C funding, in what is believed to be the largest-ever funding round for a Bitcoin-related company.

DFJ Growth led the round, and was joined by The New York Stock Exchange, USAA, BBVA (Spain), NTT Docomo (Japan), Valar Capital, Vikram Pandit, Tom Glocer and Carlos Rodriguez Pastor. Returning investors included Andreessen Horowitz, Reddit Capital and Union Square Ventures. No word on valuation, although an earlier Re/Code report suggested that the deal would value Coinbase at around $400 million.

That is real money folks.  How long until we regularly use bitcoin for some kind of purchase?  I wonder.

Happy Reading,

J.W. Gant

Bitcoin in the News

How about we take a moment to take on a new subject?  What is Bitcoin?





A quick consultation with WikiPedia may help:

Bitcoin is a peer-to-peer payment system and digital currency ... It is a cryptocurrency, so-called because it uses cryptography to control the creation and transfer of money.

This has been in the news a bit lately and I feel it is a good time to address it in my blog.  I found an excellent 5 minute explanation of what Bitcoin is that is well worth reading unless you are already up to speed.

Explain Bitcoin Like I'm a Five Year Old

Businessweek.com has an article on the acceleration of this space:

bitcoin-mining-chips-gear-computing-groups-competition-heats-up

Here is a snippet from that:

Joel Flickinger’s two-bedroom home in the hills above Oakland, Calif., hums with custom-built computing gear. Just inside the front door, in a room anyone else might use as a den, he’s placed a desk next to a fireplace that supports a massive monitor, with cables snaking right and left toward two computers, each about the size of a case of beer. Flickinger has spent more than $20,000 on these rigs and on a slower model that runs from the basement. They operate continuously, cranking out enough heat to warm the house and racking up $400 a month in electric bills. There isn’t much by way of décor, other than handwritten inspirational Post-it notes:

“I make money easily,” one reads.

“Money flows to me.”

“I am a money magnet.”

Flickinger, 37, a software engineer and IT consultant by trade, doesn’t leave the house much these days. He’s a full-time Bitcoin miner.

Think this isn't real?  How about buying goods at an eCommerce website using Bitcoin as your payment mechanism and seeing the goods delivered to your door.  Sounds like real money to me.

Both Overstock.com and Newegg.com have been planning to do this and Overstock has launched already:

Overstock.com

Newegg.com

This is big news in my opinion.

Happy reading,

J.W. Gant