Bitcoin is booming. Backed by Washington and such business and Wall Street heavyweights as Virgin founder Richard Branson and Bank of America strategist David Woo, the virtual currency has emerged as a financial phenomenon, trending in news from Argentina to Zimbabwe. Many buyers and banks, however, remain skeptical of Bitcoin’s viability and worriedly point to its extreme volatility and connection with illegal sales and money laundering.
Techonomy’s David Kirkpatrick, also a contributing editor at Bloomberg, appeared on Bloomberg Surveillance on Monday to talk Bitcoin with Bloomberg reporter Matt Miller. In the spirit of the “12 Days of Christmas,” Miller is conducting a “12 Days of Bitcoin” experiment, doing something different with his Bitcoin every day. But before the experiment could begin, Miller had to buy the Bitcoin itself, which proved more difficult than he thought. Miller cited a time-consuming registration process and wide price variations as his first barriers.
So if Bitcoin is so unpredictable and unwieldy to use, why does it matter? According to Kirkpatrick, Bitcoin’s import is its promise of transforming the world of finance. “It is a nongovernment-issued transnational currency, which is the first time we’ve ever had anything like that,” he said. “The Internet is the ultimate transnational nongovernmental thing … and now we actually have a new kind of money that is emerging just for that medium.”
Sure, Bitcoin could end up failing, as skeptics theorize—but not without challenging the constraints of e-commerce and exchange, and even our entire construct of money.