Bitcoin is not legal tender anywhere and doesn’t generate income as other investment-class instruments.
It fluctuates so much it makes the most volatile commodities futures look tame in comparison.
And there are still too many glitches in its emerging network for Bitcoin to be entirely reliable.
“It’s very much still an experimental currency and it should be considered a high-risk environment for consumers and investors at the moment,” said Patrick Murck, general counsel for the Bitcoin Foundation, a nonprofit, in a Senate hearing last week.
But a New York Times overview of the Bitcoin’s compelling and rollercoaster existence points out that it “embodies an elegant and disruptive technology,” using file-sharing, the peer-to-peer system that gave birth to early music services like Napster, Kazaa and LimeWire.
Napster’s existence, and that of the others, led to a complete digital transformation of the music business. Can Bitcoin do the same for currencies?
From the New York Times:
Bitcoin gives file-sharing a brilliant twist. In essence, it has created “a decentralized virtual currency that uses a peer-to-peer consensus system to confirm and verify transactions,” two researchers at the Federal Reserve Bank of St. Louis concluded in a recent study. And François R. Velde, a senior economist at the Federal Reserve Bank of Chicago, made this assessment in a new report on bitcoin: “It represents a remarkable conceptual and technical achievement, which may well be used by existing financial institutions (which could issue their own bitcoins) or even by governments themselves.”