The sharp peaks and valleys in Bitcoin's value are clear warning signs that this new cryptocurrency is anything but stable. Until more people actually use the currency to buy things, as opposed to speculating in the currency itself, it's difficult to say what role Bitcoin will play in the future economy.
Is the world really ready to ditch our centuries-old paper and coin, government-backed monetary systems for a purely digital currency? Or will the blockchain technology behind Bitcoin prove more revolutionary than the currency itself?
Bitcoin's success as a speculative commodity has opened the floodgates to hundreds of new cryptocurrencies, each competing for a niche in the market. As we mentioned earlier, some differentiate themselves by their deep encryption and anonymity. Others boast faster transaction processing speeds. But the most promising Bitcoin alternative to date is something called Ethereum.
Ethereum is less of a pure currency than a full-service financial platform. Unlike Bitcoin, you can't use Ethereum's currency (called ether) to buy stuff in the real world. The real power of Ethereum comes from its next-generation blockchain technology and robust programming language. Economists are excited about the potential for Ethereum to usher in an era of "programmable money" and "smart contracts" that run on cryptocurrencies. Again, the underlying blockchain technology may be the game-changer, not the currencies themselves.
Whether it's Bitcoin, monero, dollars or euros, our global economy requires all of us to trust a system of currency that makes sense. Perhaps the future of money is going to be a lot more fluid, with electronic transactions processed on a secure, decentralized blockchain in every currency imaginable.
But before that happens, Bitcoin and other cryptocurrencies will need to address their energy problem. All of the computing power required to mine and verify Bitcoin leaves a huge carbon footprint. Environmental watchdogs calculate that a single Bitcoin transaction consumes as much energy as nine US homes burn through in a full day [source: Digiconomist].
- Anderson, Nate. "Mining Bitcoins Takes Power, but is it an Environmental Disaster?" Ars Technica. April 14, 2013. (April 15, 2013) http://arstechnica.com/business/2013/04/mining-bitcoins-takes-power-but-is-it-an-environmental-disaster/
- Bitcoin. "Some Things You Need to Know." (April 15, 2013) http://bitcoin.org/en/you-need-to-know
- Brown, Eric. "Is Bitcoin Mining an 'Environmental Disaster'? In Short, No." International Business Times. April 14, 2013. (April 15, 2013) http://www.ibtimes.com/bitcoin-mining-environmental-disaster-short-no-1191035
- Chappell, Bill. "Bitcoin Surpasses $200 Mark, Continuing 'Epic' Rise." NPR. Apr. 9, 2013. (April 15, 2013) http://www.npr.org/blogs/thetwo-way/2013/04/09/176708504/bitcoin-surpasses-200-mark-continuing-epic-rise
- Cheng, Evelyn. "Dark web finds bitcoin increasingly more of a problem than a help, tries other digital currencies." CNBC. Aug. 29, 2017 (Dec. 7, 2017) https://www.cnbc.com/2017/08/29/dark-web-finds-bitcoin-increasingly-more-of-a-problem-than-a-help-tries-other-digital-currencies.html
- Copeland, Michael V. "What's Riskier than Bitcoins? Bitcoin Companies." Wired. Apr. 19, 2013. (April 20, 2013) http://www.wired.com/business/2013/04/whats-riskier-than-bitcoins-bitcoin-companies/
- Dachis, Adam. "Ask LH: What is Bitcoin and How Can I Use it?" Lifehacker. Mar. 27, 2013. (April 15, 2013) http://www.lifehacker.com.au/2013/03/ask-lh-what-is-bitcoin-and-how-can-i-use-it/
- Digiconomist. "Bitcoin Energy Consumption Index" (Dec. 7, 2017) https://digiconomist.net/bitcoin-energy-consumption
- The Economist. "A Bit Expensive." Mar. 19, 2013. (April 15, 2013) http://www.economist.com/blogs/graphicdetail/2013/03/daily-chart-12
- The Economist. "Monetarists Anonymous." Sept. 29, 2012. (April 15, 2013) http://www.economist.com/node/21563752
- Farviar, Cyrus. "Is Online Gambling Legal if Bitcoins, Not Dollars, Are at Stake?" NPR. Feb. 6, 2013. (April 15, 2013) http://www.npr.org/blogs/alltechconsidered/2013/02/06/171182974/is-online-gambling-legal-if-bitcoins-not-dollars-are-at-stake
- Forbes, Steve. "Bitcoin: Whatever It Is, It's Not Money!" Forbes. Apr. 16, 2013. (April 20, 2013) http://www.forbes.com/sites/steveforbes/2013/04/16/bitcoin-whatever-it-is-its-not-money/
- Gibbs, Samuel. "Bitcoin: $64m in cryptocurrency stolen in 'sophisticated' hack, exchange says." The Guardian. Dec. 7, 2017 https://www.wired.com/2017/05/silk-road-creators-life-sentence-actually-boosted-dark-web-drug-sales/
- Greenberg, Andy. "Founder of Drug Site Silk Road Says Bitcoin Booms and Busts Won't Kill His Black Market." Forbes. Apr. 16, 2013. (April 20, 2013) http://www.forbes.com/sites/andygreenberg/2013/04/16/founder-of-drug-site-silk-road-says-bitcoin-booms-and-busts-wont-kill-his-black-market/
- Greenberg, Andy. "The Silk Road Creator's Life Sentence Actually Boosted Dark Web Drug Sales." Wired. May 23, 2017 (Dec. 7, 2017) https://www.wired.com/2017/05/silk-road-creators-life-sentence-actually-boosted-dark-web-drug-sales/
- Irwin, Neil. "Bitcoin is Ludicrous, but It Tells Us Something Important about the Nature of Money." Washington Post. Apr. 12, 2013. (April 15, 2013) http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/12/bitcoin-is-ludicrous-but-it-tells-us-something-important-about-the-nature-of-money/
- Krugman, Paul. "The Antisocial Network." New York Times. Apr. 14, 2013. (April 15, 2013) http://www.nytimes.com/2013/04/15/opinion/krugman-the-antisocial-network.html?_r=0
- McMillan, Robert. "Hackers Pull off $12,000 Bitcoin Heist." Wired.com. Mar. 7, 2013. (April 15, 2013) http://www.wired.com/wiredenterprise/2013/03/digital-thieves-pull-off-12000-bitcoin-heist/
- Melendez, Eleazar David. "Bitcoin Celebrated as Way to Avoid Taxes." Huffington Post. Apr. 16, 2013. (April 20, 2013) http://www.huffingtonpost.com/2013/04/16/bitcoin-taxes_n_3093182.html
- Petronzio, Matt. "8 Vendors that You Didn't Know Accepted Bitcoins." Mashable. Mar. 29, 2013. (April 15, 2013) http://mashable.com/2013/03/29/bitcoin-vendors/
- Russo, Camila. "Bitcoin Exchanges are Buckling While the Prices Surge Past $16,000." Bloomberg Technology. Dec. 6, 2017 (Dec. 7, 2017) https://www.bloomberg.com/news/articles/2017-12-07/bitcoin-soars-through-14-000-mark-up-more-than-40-this-month
- Say, My. "Bitcoin and the Future of Money. " Forbes. Apr. 15, 2013. (April 20, 2013) http://www.forbes.com/sites/groupthink/2013/04/15/bitcoin-and-the-future-of-money/
- Sidel, Robin. "Bitcoin Investors Hang on for the Ride." Wall Street Journal. Apr. 16, 2013. (April 20, 2013) http://online.wsj.com/article/SB10001424127887324345804578426692340390104.html
- Simonite, Tom. "Bitcoin Isn't the Only Cryptocurrency in Town." Mashable. Apr. 15, 2013. (April 20, 2013) http://mashable.com/2013/04/15/bitcoin-cryptocurrency/