As 2013 winds down, it must be acknowledged that in the financial world, the story of the year has been crypto currencies. Our own awareness that Bitcoin may be something more than a passing fad came in March of this year as the crypto currency gained in price and popularity.
Since that time, many have been the detractors who have dismissed Bitcoin on the grounds that it is a “Ponzi scheme.”. What such detractors fail to realize is that it is that Ponzi schemes are embedded in the very nature of all forms of money.
Money, in any form, is nothing more than a concept. All that Bitcoins do is capture this concept, that we refer to as the monetary premium, in its purest form.
JPMorgan Steps Into the Fray
Recently it has come to light that JPMorgan is dusting off a patent it filed in 1999 for an anonymous payment system that is similar to Bitcoin in what is surely a heavy handed effort to exert its primacy in the crypto currency space. Whether or not they will succeed remains to be seen (at last count, they had been rejected 175 times), but one thing is clear, the digital currency space is divided into those who want to mainstream these currencies and being them under sovereign control, and those who do out.
These types of philosophical divisions are as old as time itself, that of the anarchist and the statist, and the schism will remain, though the thought of anarchists and statist sharing a blockchain is interesting indeed.
Another development worth following is the rise of the Dogecoin, which is all at once a joke and a serious foray into the crypto currency space. You see Dogecoin is one of many cryptos that we foresaw coming into existence back in April and is further proof that the fiat currencies of the world are wholly inadequate and act as a restraint on human trade rather than a facilitator of it, which is really their only redeeming quality.
Dogecoin became well known on Christmas day, when it was compromised (read hacked) causing roughly $12,000 in losses, reminding the world that crypto currencies may not yet suitable for holding wealth on a large scale due to a lack of insurability.
Looking back upon 2013, it is likely to be remembered that, for better or worse, crypto currencies went mainstream, and money may never be the same again.