Don't panic, but your Bitcoins may just vanish into the ether next month The community-driven organization overseeing Bitcoin on Wednesday warned that any Bitcoins received after Monday, July 31, 2017 at GMT-0700 may vanish into thin air or be rejected as invalid. Bitcoin.org said that at the end of the month, Bitcoin confirmation scores – a number that represents the difficulty of altering the …
That leads me to wonder why they're worried their bank account might be frozen?
Bitcoin's value once collapsed from $1,500 to $100 in two days. That's quite a high risk. Plus it's so volatile that the price can fluctuate by a few dollars each time a coin is sold for cash - which is a similar (or higher) cost than you pay for changing currencies. And $100 in a day shifts happen quite often.
Obviously if you're getting paid in Bitcoin, then it makes sense to use them for what you want. But that huge volatility is very expensive compared to the stability of almost any currency you care to name.
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See the mess that happened in Cyprus a few years ago, with bank accounts frozen for a couple of weeks & money effectively stolen from them by the government.
(Ok, the government called it a "tax" on all accounts with the two main banks, which were both on the verge of going bust before the government stepped in. But no-one had ever imposed such a "tax" before or even discussed such a thing. And the government had guaranteed that bank balances below a certain amount (100,000 Euros) would be 95% guaranteed even if the bank went bust, and the "tax" broke that guarantee. The government eventually partly backed down because of that, and only "taxed" people with more than the guaranteed amount. But it's still a scary precedent).
Obviously if you're getting paid in Bitcoin, then it makes sense to use them for what you want.
The currency risk explains why Bitcoin is better considered a means of payment than a currency but there are plenty of places where people will prefer the currency risk over currency controls, retrospective taxes, bribes, etc.
Inflation, as long as it's predictable and not outrageously high, can be planned for. Crashes in value are a much tougher problem to deal with. How do you set the interest rate for a loan in a currency as volatile as Bitcoin? You don't know in a year if it'll be up 20% or down 50%. Similarly, you can't quote prices that are good for any length of time, unless you quote them in a more stable currency and do the exchange rate math each day.
Whether this matters depends on whether we're talking about a commodity to be used as an investment, or a currency to be spent. People won't spend something that's increasing in value; they'll hoard it instead. This is fine in an investment but not great if you're creating a currency you want to circulate.
As managed by the number of marks who get infected by ransomware, a proportion of whom will choose to pay the ransom and so have to buy in. Bitcoin is a managed currency, where 3 factors: mining, anonymisation and demand management are all likely to be in the hands of those controlling the biggest botnets for various technical and cost reasons. So this impending fork probably won't change the game much, though might leave cybercriminals 2 different payment options. Governments blocking the $conventional for Bitcoin exchanges as money laundering accessories would do that, by making it impossible for marks to pay ransoms, making Bitcoins worthless overnight.
I didn't understand most of the content of that article. What I also don't understand is why bitcoins are worth anything at all. It sounds unreliable, and it fluctuates too much. And the one time I tried to buy bitcoin I found it to be the most fiendishly complicated thing to do. And time consuming.
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