With the popularity and price of the Bitcoin surging at record highs these days, the role that this digital currency and other forms of virtual money will play in the future has also become an important topic. According to a BBC News report, experts are divided on this point. There are those who think that the Bitcoin phenomena is destined to fail while there are others who believe that it will be the future of money.
The report got the views of the two sides by asking the opinions of a Bitcoin advocate and a skeptic. Bitcoin Core developer Mike Hearn said he first used Bitcoin in 2009 when it was still freshly minted. He said it did not carry any value back then as users, trade, exchanges and exchange rates were all absent.
When asked why Bitcoin had value, Hearn said, "The real answer is depressing - banking is a stagnant market running on long-obsolete infrastructure, which improves only when forced to by government."
Hearn said that the reason why Bitcoin has caused such excitement globally is because it's a financial system that is designed by the people, for the people, with participants holding equal power. He added, "There are no banks because there is no need for them: People can control their own money."
However, economics lecturer at the University Of Limerick's Kemmy Business School Dr. Stephen Kinsella is skeptical about the crypto-currency. He said the Bitcoin is a speculative asset and that people are purchasing it so they can flip it to someone else. Kinsella explained that the value of the Bitcoin depends on how much the buyers want to pay for it. Thus, if the digital currency has no users then it will correspondingly lose its value.
Kinsella added, "Because it has no use value, only exchange value, Bitcoin can have literally any price, and so the market for Bitcoin is permanently in a bubble as a result. This bubble will form and burst many times, making and losing fortunes in the process."
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