Digital 'bitcoin' currency surpasses 20 national currencies in value

reply to post by JohnPhoenix

These like Bitcoins are called currency but it's understood that these are really tokens for real money because like bitcoins they are purchased with real U.S. dollars.

Bitcoins are created with value outside of any other money system. The energy required to create them gives them some sort of underlying value as well as their utility and practical benefits. Before people were even buying bitcoins with dollars or any other currency they were transferring them among themselves for items of value. There is absolutely no need for any other currency to be involved in the process, you can buy and sell goods with bitcoin directly and you can mine bitcoins directly. People just don't have the time or energy to mine their own bitcoins so they buy them from other people who wish to sell their bitcoins in return for another currency.

Originally posted by ChaoticOrder As the poster above me mentioned, the weakest points are the exchanges...

Another major weakness for Bitcoin is that it's the first major crypto-currency, and thus a better crypto-currency could be designed based on the lessons learned from the ongoing Bitcoin experiment.

It's a common phenomenon in business; the pioneer does all the hard work and heavy investment, while a savy copy cat waits and watches, then makes a move when the time is right. Apple has been hugely successful at this, so much so that plenty of people think they invented the mp3 player and the computer phone.

If/when a better crypto-currency comes along, then many of the people who actually use Bitcoin for transactions would switch to using the improved option. This would be the beginning of the end of Bitcoin; the price would begin to fall, never to rise again.

I'm sure there are still people out there who use Windows 95 or MS Dos 5.0 but the point is, if the state of the art progresses, it would become a next to worthless curiosity/hobbyist thing, more or less back to where it started out at. And for those who don't know, no, Bitcoin really can not change much with the times. The infrastructure around Bitcoin can adapt and develop, but Bitcoin itself is a protocol, and that protocol, as far as I can tell, can't much be changed.

There are already some 'me too' Bitcoin copies but so far no clearly superior option. But the founders of these currencies always seem to make sure they generate a hoard of coins for themselves before they turn these currencies loose on the public; thus there is always a major major financial incentive out there for somebody to come up with an improved crypto-currency, which all but assures that it will happen sometime in the next few years.

In other words, the crypto-currency that makes Bitcoin obsolete is probably already in development.