Bitcoin: fad, economic future or a bad deal?

Bitcoin is the trending term of the moment. New news about the digital currency pops up every day: among the most recent, we have the opening of a virtual store that works with payments exclusively in Bitcoin, BitcoinShop.us; the arrival of Bitcoin ATMs, which would be like automated exchanges that would allow withdrawals of Bitcoins in cash and as the purchase of new coins through financial deposits in the machine itself; and the inclusion of the term in the Oxford Dictionary, one of the most important in the world.

 

Enthusiasm with novelty, however, can be harmful. There are reports from financial entities, such as the European Central Bank, that show that Bitcoin has a lot in common with pyramid schemes, also known by the name of “Multi-Level Marketing”.

Note, we are not saying that buying Bitcoin is the same as investing in TelexFree, but you have to be aware that Bitcoin is still a developing currency, without government control. That’s why it’s necessary to be aware that several problems can happen, such as theft or perhaps a sudden devaluation of the currency, which can lead to financial losses for those who wanted to use Bitcoins as a form of investment.

It is also necessary to consider that the method of creating Bitcoins is based on the processing power of your machine to “mine”, through complex mathematical algorithms, a few cents of Bitcoin. It’s as if the Central Bank were at your house.

Users report that around 12 hours of mining yields around 0.30 BTC, which Izzy Nobre, a vlogger who has done extensive research on the subject, argues is a bad investment. After all, is there really any profit in this, putting at the tip of the pencil the cost of energy spent in these 12 hours, the wear and tear of the computer’s cooler , among other aspects? Well, the matter is still quite contradictory.

 

An interesting case to analyze, from the devil’s advocate’s point of view, is that of a Reddit user who invested 10 thousand dollars in machinery to mine Bitcoins, earning a mere 300 Bitcoins. At the time, with the meager result, he got tired of chasing the dream of free money, losing about 70% of his investment.

Is it really worth spending all that to mine virtual money? Besides, it is necessary to overcome the heat of a mining center. Due to the high processing, computers get overheated to the point that you can use it to dehydrate fruit! About 4 BTC mined later, look at the result of the fruit salad on top of the PC:

reaching the mainstream

Meanwhile, state finance agencies are trying to understand how they can earn their money from Bitcoin transactions.

Germany’s Federal Ministry of Finance already recognizes Bitcoin as a private currency, but insists that there will be no tax exemption for those carrying out commercial activities accepting Bitcoins. In June of this year, the German government announced that trading in Bitcoins would be subject to capital gain fees, just like any other commercial activity. TechCrunch ‘s Romain Dillet speculates that governments’ keen interest in finding ways to regulate a currency that exactly purports to be politically independent could cause Bitcoin’s original purpose to be lost over time. Who knows, it may even be elected as an international currency, but there will probably be specific local regulations in each country.

Leaving Kreuzberg, a neighborhood in the German capital where it is possible to pay for drinks, records and even cakes  with Bitcoins, the virtual currency is gradually becoming more accepted. In addition to paying for shady items on the deep web, it is now possible to pay for purchases of WordPress services , and make purchases on sites like Reddit and Mega, by Kim Dotcom. The Humble Bundle, for example, already puts Bitcoins together with payments via PayPal and credit cards.

The parity of values ​​between dollars and BTCs, however, is still very confusing, and it is necessary to understand what parity the site in question is using. This is because the currency has had peaks of appreciation, and it may be more expensive to pay for an item in Bitcoins than in North American money – considering the first transaction made with the currency, in January 2010, which paid for a pizza with about 10,000 BTCs, the equivalent of nearly 1.2 million dollars today.

In Brazil

In Tupiniquin lands, Bitcoin is still seen with a lot of suspicion. There are already specialized websites, written in Portuguese, that evangelize about the virtual currency, but there are few national establishments and services that accept Bitcoins as a form of payment.

With the help of Daniel Fraga, from the website Loja Bitcoin , and the website Mercado Bitcoin, we were able to list only six establishments: the bar and bicycle shop Las Magrelas ; the Webtronic component store ; the Kyrios inn , located on Maresias beach, in São Sebastião, on the north coast of São Paulo; the virtual drink store Terras Brasilis ; the apartment rental agency Copa Apartments , in Rio de Janeiro; and a center for Buddhist practices, Pedra Negra das Bromélias , in the mountainous region of Espírito Santo. If you know of any more, let us know in the comments we’ve included here.

The person in charge of Las Magrelas clarifies that they accept Bitcoins for “basically everything”, and that they exchange between Real and Bitcoin according to the value of the day of the Bitcoin “stock exchange” – one of the most used sites for this reference is MT gox . Terras Brasilis also makes use of the same practice – on September 11, a bottle of Johnnie Walker Red Label Whiskey, for example, could be purchased for 0.21 BTC.

 

With so few establishments accepting the new virtual currency for payments, this could be a great marketing option. The person in charge of Terras Brasilis revealed that almost 20% of all sales on the site are already made in Bitcoins.

Contradiction or excess control?

If only governments were concerned with ensuring the financial security of Bitcoin. If the fear were the theft of your precious Bitcoins, the system itself would try to at least provide you with the relief of knowing that the thief would not be able to do much with the product of the theft, since it is practically impossible to launder large amounts of stolen Bitcoins.

Every transaction made via Bitcoins is public. By tracking a public file called Blockchain , it is possible to know, hypothetically, that Bitcoin Wallet X made a transfer to Bitcoin Wallet Y, making it possible to track where the stolen Bitcoins are, but without knowing who owns them. However, if the smart guy tries to take the Bitcoins out of that environment and turn them into real-world money, he will need to register, and that is exactly when he is caught.

Laundering small amounts of stolen Bitcoin is even possible, but anyone who wants to move millions of dollars through the network will have problems, admitted Sarah Meikelejohn, a graduate student at the University of California who co-authored a study on the subject, as if to clarify that the Bitcoin network wouldn’t exactly be a good place for Walter White to hide his illegal fortune. A report by Wired highlights that any criminal who wants to convert a large amount of money into Bitcoins would have to, at some point, make use of Bitcoin exchanges, and these have gone to great lengths to work within US federal law, that prevents practices that could be used to launder illegal money.

Still, because there is no one to complain to in case of unsuccessful Bitcoin transactions, owners of the virtual currency are subject to theft. In April 2012, the Betcoin website lost 3,171 Bitcoins when it suffered a hacker invasion , the equivalent of about $450,000, an amount that it has not yet been able to recover (and does not even expect to see). However, the cyber thief will have problems when trying to launder the stolen Bitcoins from Betcoin: services that purport to do this service, such as Bitcoin Laundry or Bitmix, generally do not do what they promise or, worse, steal the bitcoins they should. be washed. In other words, thief stealing thief… 100 years of forgiveness, or eternity with Bitcoins marked as illegal.

It could be the new Second Life or the new euro

Since its introduction in 2009, Bitcoin has developed in many ways. Gradually, it gains new fans and places that accept payments with the currency. However, the mathematical processes that mining uses are getting even more complex, requiring even more powerful machines to create new Bitcoins and validate transactions made with the virtual currency.

For now, Bitcoin still hovers as a trend, which may or may not pick up in the near future. It may be the new Second Life, which resists for a few years, but ends up being left aside, but it is possible that it will become the Euro of the internet, facilitating transactions and becoming a single currency for digital payments.

Governments still seem terrified by the emergence of Bitcoin, perhaps because they don’t know how they can include it in the country’s economy, how to regulate it or even how to prevent it from becoming the default currency not only in the digital world, but also in transactions. among marginals, given its property of being anonymous.

Anyone interested in the subject can look for one of the exchanges and buy their first Bitcoins to test how it works. The most daring can use the processing power of their machines to generate their own Bitcoins, but it will take a little more technical preparation, patience and investment of time and energy (electrical indeed!).

The most disbelieving or fearful can do as I do: stay tuned and observe the market. A currency that started with little appreciation and suddenly jumps from a parity of USD 13 to 120 needs to show what it came for. Bitcoin’s future, however, doesn’t seem that far off.