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Bitcoin - Scam, Sham or maybe the next Hamiltonian invention?

Bit Coin ScamMost of our monetary policies we have today can be traced back to actions taken by Alexander Hamilton, our first Secretary of the Treasury (and father of the US Coast Guard). Bitcoin supplants, from my understanding, central banks, FX exchanges and such. What do you think, and would you join in personally and/or for your business?

Answers

Bob Scarborough
Title: CEO
Company: Tensoft, Inc.
(CEO, Tensoft, Inc.) |

Not really an answer - but an interesting take on ways to make money helping people mine bitcoins ...

https://www.semiwiki.com/forum/content/2932-asics-bitcoin-mining.html#!

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

Rather libertarian, don't you think?

No central bank. Distributed controls & trust.

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Perhaps I am the most confused about what bitcoin really is. I read what Bob posted, it thoroughly confused me. Is it basically a new form of currency? If a bitcoin isn't widely accepted for products/services why would someone want to join?

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Wayne et al

Wall Street Journal has some recent bits of information about this new coin :)

http://blogs.wsj.com/economics/2013/11/07/what-does-bitcoin-have-to-do-to-achieve-broad-acceptance/

http://online.wsj.com/news/articles/SB10001424052702303789604579195773841529160

My question: how will ERP systems and Treasury Workstations manage this?

Bob Scarborough
Title: CEO
Company: Tensoft, Inc.
(CEO, Tensoft, Inc.) |

Hi Len,

At this point I believe it is like being paid with any other non-currency commodity. You would need to record the cash equivalent transaction to clear the receivable / payable - and then record the asset as an investment or something other than currency.

Years ago I worked with a company doing substantial business with Russia - in a period where hard cash was hard to come by in Russia. For a couple of years payment was received in cases of dynamite - a commodity the US company needed to resell on the open market. The transaction flow we used was similar - the dynamite investment added an extra challenge but was eventually profitable.

The articles you list are interesting ... and have the same general conclusion about bitcoin actually replacing mainstream currency. Stranger things have happened - my bet is this remains a commodity type of value repository at best.

Bob Scarborough
Title: CEO
Company: Tensoft, Inc.
(CEO, Tensoft, Inc.) |

Hi Chris,

You can learn about bitcoin with a bit of googling and patience. It is a separate 'value' repository - hard to think of it as an actual currency. You could think of it as a new gold or other precious item - but something created by imagination and technology instead of mining it from the ground. As a new value repository it has whatever value people give it - to date it has increased substantially in value. People add philosophical and political wrappers around it ... you can treat those as you like.

There are two ways you can get bitcoins. One way is to buy them from someone else (using dollars) - like buying gold or anything else. The other way is to 'mine' them. The creator of bitcoin allows you to create more bitcoins by solving mathematical challenges. The mathematical challenges get harder as the number of bitcoins previously mined increases - and there is an upper limit to the total number of bitcoins possible.

So ... there are two ways to think about bitcoins. One way is to see if they fit your political / philosophical view of the world and expound as you see fit. The other is to view them as an investment opportunity - either through buying and selling them, or by mining more of them to sell.

The article I posted views them from the investment perspective - and from the view of mining / creating more bitcoins to sell. The mathematical challenges are getting hard enough that most people need technology to solve them - customized semiconductor (ASIC) and/or software. His theory is the more dependable money may be in selling the tools (semiconductor, software) rather than investing in the bitcoin market - sort of like selling picks and shovels to miners during a gold rush.

Bob

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Thanks, Bob! That helped. I wonder how viable these actually are, and whether companies should be concerned with recognizing them as a non-currency commodity. There again, I wouldn't have imagined using dynamite as a non-currency commodity while doing business either. It is almost like going back to the ancient days when food was given for currency.

Ken Stumder
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) |

I recall reading an article that hackers got into this bitcoin system. The use for illicit transactions, tendency to prefer to hoard the units, large fluctuations in value, etc. make it hard for me to see how it can be seriously used in business (though I understand it's been adopted as a way to facilitate transactions between two parties by legitimate businesses).

I like the fact that there is a limited number of bitcoins that will ever exists (21 million according to wikipedia). Sure beats the greenback in that respect.

Bob Scarborough
Title: CEO
Company: Tensoft, Inc.
(CEO, Tensoft, Inc.) |

A couple of articles in the new Economist on Bitcoin

One suggesting a bubble - and that it is time to sell
http://econ.st/1ca8xmM

And one covering the mechanics, administration, issues, and potential of electronic currency in general
http://econ.st/18BiBtP

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

It will be a fad that dies like beanie babies.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Much has happened since this thread, but here's a recent link on another aspect to the Bitcoin discussion, how the "blockchain' concept could disrupt other things...

http://www.businessinsider.com/the-future-of-the-blockchain-2014-4.

Bob Scarborough
Title: CEO
Company: Tensoft, Inc.
(CEO, Tensoft, Inc.) |

The blockchain functionality isn't perfect ... but maybe the concept works out the wrinkles? The new model here looks like the internet model of distributed network nodes ...

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Len. Thank you.
Keep it up. This is an important concept.
The more of us who understand it, the better, as we can put it to good use.

Cheers!

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