I want to buy some money. That can sound like a silly idea. “Hey, how much will you charge me for that dollar?” And, no, I’m not about to go on about trading in currencies. That’s been going on for centuries. The money I want is something new, and I don’t want to trade it. I want to use it. In the last few years cryptocurrencies have arisen. Have you heard of Bitcoin? It isn’t alone. People are searching for alternatives to dollars, pounds, yen, and anything printed by a nation. They couldn’t find what they wanted; so, they created what they sought. Now comes the hard part, making it work. The hard part for me is learning more. The easiest way to learn? Buy a Bitcoin or one of its cousins and see what I can do with it. Let the shopping begin.
The dollar and the Euro continue to rule the world of finance. All the cryptocurrencies added together are still worth less than a corporation like Starbucks. Bitcoin is not threatening Fort Knox. But the recent turmoil decreased confidence in the conventional financial system. Some people want to disassociate themselves from the economy that includes the military-industrial complex, fossil fuels, and corporate egregences. Movies like Money & Life illustrate some of the unsustainable assumptions behind the current system. My concern comes from the systems analyses that suggest the system is dangerously unstable.
Cyptocurrencies have been designed to answer many of the concerns. They aren’t associated with governments or banks. They can’t be printed at whim the way governments print more money. The transactions have the potential to be more secure, more secret, more reliable, and harder to abuse (though recent events have proved that no system is perfect). They are decentralized, that scary notion that power isn’t concentrated; which is also appealing to some.
There is plenty of precedent. History is filled with non-governmental currencies. The dollar didn’t become the standard US currency until 1863. As a society we’ve yet to find the perfect economic system, and alternative currencies are evidence of our attempts.
There is also plenty of ignorance, which is where I am.
Despite my ignorance I am interested because I am a curious fellow and because enough of the concerns mentioned above have convinced me that a bit of diversification is a good idea. Stocks, bonds, mortgaged real estate, and most financial instruments all have the same single point of failure. If the dollar becomes unstable, they become unstable. As an engineer I don’t like unstable systems that have critical single points of failure.
Bitcoins drew my attention over the last few years. Oh, if I had only bought back then … Last month I wrote about my early interest in it. A few weeks later the news broke of the big Bitcoin heist. I’m glad I waited. I’d like to claim wisdom, but I was too busy to get around to making the transaction. The subsequent news items and the charts convinced me that Bitcoin may be in a bubble. Just because one coin is askew doesn’t mean the others are too. I’d heard of litecoin, peercoin, and dogecoin; but the coin that inspired me to do more than study is auroracoin.
I like Iceland. They just announced a cryptocurrency that is for their citizens, and to make sure their citizens all have an equal opportunity within the crypto-economy they gave everyone the same number of coins at the same time. Instead of early adopters stepping in and making the equivalent of a land grab, they gave everyone a stake and an equal opportunity. Very cool. (I also like what they did with mortgages.)
Auroracoin and the rest have a basic problem. Everyone knows how regular money is used to buy things, but crypto-currencies are novel enough that only those with the greatest incentives have been exercising them. Unfortunately, that has frequently been the illegal set. For cryptocurrencies to succeed they have to become useful for buying food, clothes, shelter and paying for utilities. Supply and demand are flirting with each other, but it is still like boys and girls sitting along opposite walls at a high school dance. Very few are making that first move.
I may have a unique opportunity to delve in, learn more, pass along what I learn, and maybe even use such a currency for something that is legit. I already have a virtual currency from Second Life called Linden Dollars.
I’d like to diversify those dollars, so why not a non-Second Life cryptocurrency? I live in Washington State, which just legalized marijuana (though it isn’t on sale for recreational use yet). Marijuana shops have high enough hurdles when it comes to handling money through regular banks that another cryptocurrency has sprouted call Potcoin. Maybe exchanges can be made.
As I’ve mentioned, my passion is for people and ideas. I enjoy helping projects and new ideas. (That’s why I enjoy consulting.) This is a new idea that I may be able to help merely by buying a coin. And it may help me by placing me at least one small step closer to diversity in currency. My next step? Shopping for money. Always something new to learn, eh?
PS Something I recently learned is that some coins are gaining popularity as a way for readers to tip bloggers. Want to leave a tip whether I buy a coin or not? I’ve got a PayPal account. (firstname.lastname@example.org)