Is this the future of money? The idea doesn't seem too far fetched as it employs internet, the number one medium for exchanging information in todays economy, to become the number medium for exchanging value. With low transaction fees and a following of freethinkers that want to revolutionize todays world, Bitcoin has found itself in the right surroundings. We have yet to see implications and repercussion of this type of thinking, as it will bring about many opportunities and opposition.

There is already opposition against Bitcoins simply because it has the potential to strike out big financial institutions that control currency and make money off of charging transaction fees. However there is also the argument that Bitcoins is helping advocate untraceable drug trade as sites over the internet have started openly selling drugs using Bitcoins.

Some of the questions that come to my mind are, how  can development organizations benefit from using Bitcoins? Will virtual currency eventually dominate paper currency? Will people try to monopolize the world of virtual currency as they have with paper currency through banking and government institutions? Is Bitcoin a step towards or a step against approaching a better world?

I would love to get some insight, so please comment with your thoughts below.
Abeer
3/24/2013 12:12:48

Hmmm, From watching the video and reading a little on Bitcoin I am honestly not to thrilled about this so far. This is something that will work in a society that has access to the internet at all times. But if you are looking at this from a developmental perspective this is far from being something that I can see working towards changing lives.

If you look at it from a micro finance point of view, this is terrible as micro finance is usually helping people who aren't at their peak get from point A to B towards a better future where cash works as they can use it anytime they want and not having to worry about internet or not.

Well that's my 2 cents worth :)

Great write up :)

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3/25/2013 17:54:06

Thanks for the insights Abeer. I definitely see low access of Internet being an obstacle that people face when dealing with development issues. However with cheaper technology being developed, do you think it will become easier in the future for people to get donations using bitcoins? I don't think they will be accepted immediately, but I do think over the next 5 years we will hear more talk about this sort of currency.

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Ajani
3/24/2013 13:48:26

I'm not too familiar with how secure electronic signatures are, but my first concern is the risk of using Bitcoins. Just like all other online content, I'm sure someone could figure out a way to hack or steal from another person's Bitcoin wallet. But, I suppose there's risk involved with everything and anything to do with money.

Another great thought-provoking post!

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Manu
3/24/2013 15:23:24

I agree with this! I feel like Bitcoins would open up a whole new avenue of crime, or even advocating forms of crime (such as the drug deals mentioned earlier). However, I guess if this becomes the primary medium for exchange of currency, a structure for control and security in exchange would have to be developed. It's definitely an interesting concept although it seems far-fetched at this point considering the economies world-wide are variant and therefore not ready for one exchange rate.

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3/25/2013 18:04:50

Crime is definitely an opportunity with the use of bitcoins, but crime is also already an issue when dealing with money now. Your point of one exchange rate is also an interesting one to bring up. Do you think there could be other "versions" of bitcoins that would be accepted in one country at a particular rate and another country at another rate?

3/25/2013 17:57:14

Thanks Ajani! I definitely see hacking being an issue when using the Internet as a means of exchanging money. But banks have been doing pretty well with keeping our money safe, even when we do money transfers online (I haven't had a problem so I'm basing this off of my experiences). Do you think Bitcoin can harness the same capabilities?

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3/24/2013 14:46:18

Firstly, Kudoos for bringing this to my attention. Technology, gadgets, and digital advancements have always been a passion of mine. I'm surprised I didn't come across this sooner. Great video and nice write up.

Personally, I think it's a little premature to ask if Bitcoin is the future of money. Digital currency as a holistic idea on the other hand may be more likely. What is money? It is value given to paper. It used to be coins. Is it possible that in this new digital age, where groceries amongst any and everything else can be purchased and delivered to your house, money will become entirely digital? Why not?

If society as a whole is changing towards a more digital lifestyle, where payments can me made via cellphones, why not let that payment be of digital sort as opposed to a dollar value coming out of a bank? Again, this is a direction that currency may lead, but there a lot of contributing factors that would need to coincide in order for this to develop successfully. Financial institutions worldwide will oppose to this form currency, unless they establish is themselves. Law enforcement will worry about already existing channels of money laundering and would not be open to an untraceable international option being available. Also, the availability of internet in developing countries, as mentioned by Abeer, would be a factor to consider. In order for it to be a true replacement and a universally accepted currency, accessibility to the currency itself is essential at all times.

I'm not too worried about security and digital signatures as online methods of payments exist today and are thriving. Paypal being the number one example after online banking for financial institutions. There will always be security threats, there just need to be precautionary measures put in place to address them.

All in all, a good idea. Will follow along to see what becomes of them.


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3/25/2013 18:12:13

I am optimistic about the use of bitcoins as well. I think it is interesting to see things changing during our life time. Progress and changing the way we do things is always an amazing experience and fun when you're a part of it. I can definitely see technological advancements like these being a passion of mine. Thanks for the insight!

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3/24/2013 21:06:25

Do you know where they make their money from? There must be some kind of capital to run Bitcoin.

Going on the website, it says that you can pay a voluntary fee if you want to increase your transaction priority. To me, I'm not entirely sure what that means, but if Bitcoin does become a good thing, it's the people with money who will get priority, as the rest of people may not get the best service.

To me, I personally don't trust it right now, especially because it doesn't seem all that different than my current online banking, since I have a no-fee student account with my bank.

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3/25/2013 18:50:13

I definitely see your point about people with more money being prioritized as that is the norm in todays world. However I myself am not entirely sure on how to attain a Bitcoin but I don't think that having more paper money translates into having more Bitcoins, unless of course you buy a lot of Bitcoin stocks, in which case may result in more people being able to pursue more bit coins. What do you think?

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yogi
3/27/2013 04:30:09

I was given some free bitcoins by a founder of a startup last year...it was just sitting in the account and i saw that it is now worth over $500 usd. Risky product and the value will fluctuate but no doubt bitcoin is here to stay but won't replace paper money.

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    Zain

    As an avid listener of instincts and humanity, I strive to do things that put me out of my comfort zone. Cherishing the growth that comes along with this habit and all the beauty that life has to offer, I'd like to share my experiences with you. 

    All posts and opinions expressed are mine and completely independent of the University of Waterloo and the International Development program.

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