Who gets the riches for creating BitCoins? Is it like PayPal, über or the list of other Silicon Valley Startups where a few people get all the money?
After some digging in the BitCoin mine, it appears that the “Miners” are the top of the food chain. When a “miner” goes to work to “mine” a bit coin they earn a BitCoin. Then the “miner” can sell the BitCoin or exchange it for good and services.
Can anyone “mine” a BitCoin? It appears so, but it clearly isn’t easy or everyone would do it.
The BitCoin “mine” is limited to 21 million BitCoins, so someday the miners will be out of work.
This is no different than the US Government printing a $100 bill and transferring that bill to someone else to pay for goods or services is it? The bill essentially came from thin air just as a BitCoin does.
The concerns I see about BitCoin go back to the 1940’s and the original concerns about the US Dollar with government intervention. Big business minds back then thought about how to create a non-entity dependent currency. Technology wouldn’t allow it until BitCoin. The discussions back then tied the new money to things of value, like the gold standard but a more broad mix of commodities to prevent bubbles and bursts.
BitCoin has no backing at all. If you demand your money one day, there is no “good faith of the bitcoin miners” to give you your money back. Even government backed doesn’t guarantee anything. Since the Gold Standard, the US government has nothing but the faith of the world in the dollar to back up the dollar. Let’s be real here, currencies fail, government backed or not. Look back at the history of the German Mark or Zimbabwean Dollar.
My Thoughts – BitCoin is a fiat money that only has value because “the market” says so, not because there is any government or physical thing backing it up. So who is “the market”? The people that buy and hold BitCoins and the Businesses that accept “BitCoins” are the market. My company does not yet accept BitCoins so we are not yet part of “the market”
The fact that the “miners” building the code get the income and not the founders is a huge move in the right direction. Marx would be proud, an not in the bad Stalin way. The workers that built BitCoin get most of it. Obviously the creators “mined” a few BitCoins in the beginning.
BitCoins problem over time might be it’s inability to grow. Population and popularity growth will change the need for currency. I want a Coke to be $1 forever, My parents want it to be a dime, but neither want to pay .00000000214 bitcoins. That just looks weird. How does a small child make sure he isn’t ripped off and charged .0000000214 bitcoins for a Coke? A four year old gets a dime or a dollar but might miss a decimal point.
Money as we know it exists simply because none of us want to stand on the corner and trade whatever it is we do for those things we need. Can you imagine if we had to charge a client four chickens, fourteen potatoes, a case of wine, a bottle of water, three bags of charcoal, a box of matches and some dish soap so that I could make them a video? And then imagine if I had to divide that up and pay my crew? The system would break down and nothing would ever happen.
In a perfect world there would be only one form of “money” so we could all set a base value for goods and services and the markets would control pricing. The Euro was a start in that direction but with Brexit, maybe not. We all want a good deal, but none of us (that earn money or create real value) really want to pay for someone else’s good deal.
I like the idea of BitCoin. The fact that I wouldn’t have to give money to PayPal each time I transfer it is a bonus. The fact that no one became a multi-billionaire for creating bitcoins is even better. Will I use BitCoin? Time will tell.