Follow Howard Lindzon: Get every new post delivered to your Inbox. Just enter your email address below and click follow.

Bitcoin…The Jurassic Park of Currencies

You better learn how to code.

Math and technology is winning over commodities in this epic run.

Obama promised us infrastructure. I guess cheap servers used to build Bitcoin was what he meant by infrastructure. Jurassic Park has been unleashed in the financial world. The economists have been calling for a currency war. While they have been busy writing books about the war, Jurassic Park happened.

Jurrasic

Less than two weeks ago, I asked ‘Is Bitcoing ($BCOIN) winning?’

Just the fact that I was writing about it made me want to short it! Thankfully I did not. Today I won’t chase it or short it either, but it is fascinating.

The price has now doubled in two weeks. Here is a price chart – courtesy of Mt. Gox (I love the lingo).

In June 2011, the Economist covered Bitcoin. If you look at the chart, the price peaked that month and fell 90 percent over the next year.

I have not seen that same type of coverage this time around. I have seen hundreds of ‘tulip’ like stock ascents and Bitcoin looks no different, but you never know. I love this commentary from my friend Charles Amadeus:

Bitcoin, BTC or $BCOIN on StockTwits is a decentralized value transfer protocol.
It is an anarcho-capitalist wet dream with Neal Stephenson as narrator.

It is a Ponzi scheme, but so is the USD and financial capitalism.
It is used for illicit dealings, but so is the USD and financial capitalism.
It is highly speculative and risky, but so is the USD and financial capitalism.

It is NOT made out of thin air or backed by the threat of violence.

This isn’t like gold or Yen, but there is a tangible, material and real thing of value created by the Bitcoin network.

Fundamentally, BTC is a public transaction history wrapped in a hard math problem. Hard in the sense that it cannot be solved with reasonable funds in a meaningful amount of time using technology in the public domain without violating fundamental assumptions we make about physics, matter and energy.

  • ZekeV

    And the best part is, most people do not realize what bitcoin is really good for. It is a way to sign transactions uniquely, ie, a payment network. Bandwidth on this network, whether denominated in “coins” or whatever, has some non-trivial value. And to the extent you can trade it, it may appear to be a currency. But it is NOT currency in my view. Bitcoin will get to a certain price, say $1,000 / btc, and then alternative decentralized payment networks will start to crop up like mushrooms (if they haven’t already). At that point, the real money will be in providing liquidity / information between those networks. I have been trying to figure out what the next wave of disruption will look like, and am starting to think this may be it…

    • http://www.howardlindzon.com howardlindzon

      thanks zeke

    • herzmeister
      • ZekeV

        yeah, ripple is a good example of what can be built on this infrastructure, though i think it is fundamentally flawed from a standpoint of human / economic psychology. here’s a good running list of attempts to create alternative cryptocurrencies (read, payment networks) https://en.bitcoin.it/wiki/List_of_alternative_cryptocurrencies

    • http://www.twitter.com/simondlr Simon de la Rouviere

      This is already the case with Litecoin, probably the most popular alternative to Bitcoin. It’s virtually the same, except for some minor changes such as a different hashing algorithm, faster transactions and more coins (vs Bitcoin’s eventual 21 million).

      The interesting thing however is that at certain points, it becomes more profitable to mine Litecoin, and then exchange it for Bitcoin. Yesterday when the difficulty increased (30%) for Bitcoin, it become instantly profitable again for Litecoin miners. The people with cheaper rigs (running GPU’s vs the new ASICs), hop over to Litecoin instead, because the returns are greater against the exchange rate of BTC/LTC.

      • ZekeV

        fascinating stuff. fortunes will be made and lost!

  • B.S.

    This currency will fundamentally change the way our society works. Bottom up innovation and disruption in it’s purest form. Never has a generation felt so trapped by the financial corruption and idiocy of our government and banking institutions. Now we finally have a choice. Bitcoin is more than money. Bitcoin will be the revolution.

    • http://www.howardlindzon.com howardlindzon

      maybe

  • Rosswhiting

    Weird and crazy, but I was just walking up a trail to Mamoa Falls on Oahu where J Park was filmed, part of it anyway and had this same thought. Go $BCOIN. The Government needs some competition. If it plays out like the space industry. Obama loses… Howard, I hope you are an investor in BCOIN. You love stocks, but do you love money. haha. Love and Respect yah.

    • http://www.howardlindzon.com howardlindzon

      :)

  • Pingback: Morning News: March 27, 2013 Crossing Wall Street

  • Pingback: Bitcoin…The Jurassic Park of Currencies – Howard Lindzon | Howard … - Let You Know Everything

Back

© Trends… Find them, ride them and get off.. All rights reserved.