Hidden advantages and disadvantages of Bitcoin.
Last November, a medium sized cafe in a busy seaside town that accepted Bitcoins as payment for goods was making up to 15% more profit than those who only accepted Sterling. (This may or may not be true but let’s say it is for the purpose of this article).
How did this work?
For example on a Monday the cafe owners might sell £300.00 worth of refreshments. They accept Bitcoin and cash these to GBP later on the following Friday when the price of the Bitcoin had risen 15%. But does this mean that now companies are loosing money due to the sharp decrease in the currency’s value?
The common argument.
The argument of many is that Bitcoin is not backed by gold and only has a “promise to pay” as security. However there are thousands of cash currencies worldwide that are not backed by gold (less than 5% of GBP in circulation is still backed by gold). With the amount of American dollars in circulation increasing as the US prints more and more dollars for it’s own short term bailout; does that mean there is enough gold in Fort Knox to support it? The answer is surely NO.