Monday, November 25, 2013

For now, bitcoins are a currency to be cautious of

I may be dating myself, but when I was growing up, windows were things that kept the wind out of the house or let it in, depending on the season. An apple was something that grew on trees and was used for pies and snacks.

Today, technology has brought new meanings to both words. The new meanings of these words are ever-present reminders of how technology has changed our lives.

Back in the day, if a transaction wasn’t handled using cash, it was more than likely paid for by check. Many readers can probably recall going into a retail establishment and seeing a bounced check taped on the wall. I guess the intent was to let everyone know that Mr. or Mrs. Whomever wrote bad checks and that they should be embarrassed and not be deemed as trustworthy.

Then came credit cards and debit cards, which most people carry in their wallets today. Whether you use cash, checks or credit/debit cards, there is a common thread. They are all linked to a currency.

Obviously, the U.S. dollar is the American unit of currency. Our neighbors to the north have the Canadian dollar, featuring my favorite, the Loonie, a gold-colored coin introduced in 1987. The British have the pound, the Japanese, the yen, and the Germans, the mark. All these various currencies throughout the world have been associated with a specific nation. But, technology is trying to change the world again.

Recently on the business channel, I saw the Winklevoss twins, who made their name via their well-publicized battle with Mark Zuckerberg. The issue in dispute was who really started Facebook. Today, the Winklevoss brothers are big investors in digital currency. Yes, in today’s high-tech world, technology has brought us a new, digital currency straight out of cyberspace. A currency, by the way, that is not affiliated with any nation. The term for this new currency is bitcoin.

As a non-techie, I’m still trying to wrap my head around the concept and practicality of bitcoin. It’s far more complex than trying to convert one nation’s currency to another’s, especially since it isn’t backed by the full faith and credit of any country. Some people, like the Winklevoss twins, believe there is a lot of money to be made in this relatively new cyberspace currency. I bring this up because they may be right. Bitcoin may have the potential to make someone some money. It’s certainly possible that, as more and more people hear the term bitcoin, they may begin to use bitcoins in their transactions.

But, being somewhat of a skeptic, I believe there’s a great potential for a lot to go wrong. I say this because it’s difficult to regulate cyberspace. What’s more, bitcoin values fluctuate and I have yet been able to find anybody that can answer all my questions.

Basically, I just want to make my readers aware of this new cyber currency. But I also want to express my concerns because it’s somewhat complex, it appears unregulated and as a financial adviser, I see quite a few red flags. Years from now, bitcoin may be a household word. But right now, as I see it, it’s a word for caution. This may be one instance where technology has gotten ahead of itself.

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