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What is a Bitcoin?

That's the title of a live radio program I took part in this Tuesday on KCUR, Kansas City's NPR radio station. Josh Zerlan, COO of Butterfly Labs (which manufactures Bitcoin mining hardware) also took part in the segment, as did several persons who called in with questions. The program was very ably hosted by Brian Ellison.

When I first took a good look at Bitcoin about a year ago, it could claim only about 1000 registered bitcoin-accepting merchants. Today the figure is 10,000. I wouldn't be surprised if it reached 100,000 in another year.

  • Richard Schulman

    Kudos to Professor Selgin for this fascinating, educational talk — above all for the light it cast on the nature of currencies and the strengths and weaknesses of the different forms they take. Of especial value was his identifying the key long-term weakness of a bitcoin currency should it come into widespread use — that, being non-expandable once its upper limit of 21 mn. is reached, it would be deflationary. The obvious implication — alluded to briefly — is that better non-deflationary virtual currencies would not be difficult to develop and would have the additional pleasant side effect of rendering central banks superfluous.

  • alanx

    Bitpay claims to have over 10,000 merchants alone. I don't know how many Coinbase has, but I'd be surprised if they had less than 5000.

    So making 100,000 by next year when Bitpay got a 10X boost this year should be a snap.

  • I remain skeptical of Bitcoin as a widely used currency in the long term, but Bitcoin could blaze the trail for a currency with a more elastic supply. That said, I'm very leery of a supply determined by some macro-economic statistic, like a CPI or GDP. The supply of money should respond directly to the demand for indirect exchange (the demand for short-term credit).

    I'm also leery of any macro-economic theory that places too much weight on the monetary system as cure-all for economic ills. The best possible monetary system cannot cure an economy held together inflexibly by rigid and inefficient bounds of propriety without effectively employing available resources, particularly labor.

  • reymarkperry

    I personally see BTC and its ability to be a very valuable currency in the future. Since it is decentralized, the value would not be based upon the health of a country, rather the value to the currency it makes online. I totally love the concept that BTC almost does not have transaction fees.