Investing Insider�has an interesting article in which the talk about Jaron Lukasiewicz’s entrepreneurial experiences. �He is preparing a launch of his trading platform, Coinsetter, this year. ��According to the article, Jaron sees Bitcoin’s rise as partly a response to the the failure of governments to fix the financial industry after the crash of 207-2009. �They also detail how Charlie Shrem’s BitInstant is helping to popularize Bitcoin for daily, in store, transactions, including the first New York bar to do so, EVR. �What I like the most in the article is Shrem’s comment��There is so much potential, I am just waiting for it to be a billion dollar industry.�
Which brings me to the additional title for today’s roundup. �Many of the established press’s articles about bitcoin mention that it is or might be a bubble. �Is it? �In fact, it is going to have to have a meteoric rise in value in order to become a viable currency option. �Even with a substantial portion of bitcoins still in the ‘ground,’ their number will not nearly begin to be able to cover the value needed for all the kinds of exchanges that Bitcoin will necessarily have to achieve. �So, the price must rise. �That, is not a bubble, but an inflation of the currency to match the size of the economy it serves.
Of course, this brings up the Babysitter Commune problem that Krugman poses as one of his main criticisms of Bitcoin. �Why spend if the price will rise. �The answer to that, I think, is that there is going to be a bit of chaos in the system. �Events, news, market movements, will drive the price of Bitcoin up. �Then other events, scandals, or negative news reports will drive the price down. �Some will tried to hoard, some will try to time the market, and some will say to hell with it and buy some diapers or pay the rent. �It will be fits and starts and it will be painful for many. �It will be wildly profitable for many as well.
Finally, probably after some international monetary crisis has caused a mass exodus into Bitcoin, it will achieve price stability when it will become a true currency and not a speculation. �I don’t see that national�currencies�will fade away, but that Bitcoin will become a natural, and respected, alternative money.National currencies may then start pegging their values to Bitcoin rather than to each other or to a natural resource since Bitcoin at this point will become a much more accurate way to judge value, particularly across borders.
Let’s contrast this with this report from Marketplace.org. �Amazon has announced that it is going to start issuing its own ‘currency’ which users can buy and then use for things like in app purchases. �In this case, I think that calling what Amazon is doing a currency is a gross misnomer. �Script, maybe. �What it is doing is no better than buying chips at a casino which can only be used at that casino or maybe a few others if deals have been arranged. �The chips are not currency, they are IOUs for currency. �This is not at all the case with Bitcoin.
Happy Mother’s Day to all you moms out there!