Sunday, 1 December 2013

Mathematical Money

Bitcoin is one of a group of digital currencies that has been making some headlines recently and is being closely examined by the conventional financial world.

One thought expressed is that this could seriously de-stabilize conventional currencies and another is that it should be banned simply because it is anonymous and therefore ideal for money laundering. I think probably neither will prove to be true because it is too unstable and not tied to any conventional currency in the same way that Paypal or Payza is for example.

In the same way, the money launderers won't be crazy about a currency that can halve its value relative to the dollar overnight. I have to say I don't totally understand exactly what DOES drive the Bitcoin value relative to any real world currency.

Nor, at the moment do I understand the mathematics that drives Bitcoin production. Yes, you can actually manufacture Bitcoins by this complex mathematical procedure and you don't HAVE to understand how it happens.

There is plenty of info around about getting started with Bitcoin, you can Google for it. There are also places you can make Bitcoins in the same way as you do ordinary money - clicking ads, watching videos and so on.  It's a lot of effort for tiny rewards but if you want to do it, it's up to you.  Here's a place to get started - Bitcoinget or BitVisitor to find places to earn Bitcoins.

I first wrote this post earlier in the year and have edited and re-issued in view of the fact that Bitcoin has become better known and has experienced a massive rise in value. It may be a bubble, maybe not.  Online merchants like Gyft (US based) are now accepting Bitcoin and the first Bitcoin ATM has opened in Vancouver. If Bitcoin continues to rise in value, your clicks for fractions of Bitcoins today may turn out to be worth very much more in months and years to come. On the other hand it may be worth zilch.

The market is very volatile right now and there's no telling which way it's going to go. In May this year one Bitcoin was worth about $350, in the last few days preceding this post it has been over $1000.

One thing that all the Bitcoin documentation tells you to do is to back up your wallet or wallets to your PC because hacking is a risk and also keep an offline note of your IDs and passwords because they are not retrievable.

Useful sites to visit are Blockchain and MtGox where you can get a Bitcoin address and somewhere to store the Bitcoins you will be earning plus a means of storing that value on your PC or cloud drive. Even better is Coinbase where you will earn for referring new members who use the site to transfer at least 1 Bitcoin. Coinbase will allow you to create new Bitcoin addresses.