Coins! What are they good for?

Yesterday, (this morning really but this will be posted tomorrow) I wrote about what bitcoins are and some of the reasons they exist. I may need to don the tinfoil hat before I'm done with this novel because even I think I sound a little nutso at times!

What can you use btc for?

So, as I was reading yesterday, I came across so many uses, that it made my head spin. Yes, there are those exchanges where people buy all sorts of naughty things. Silk Road allowed users to anonymously hire and pay for random illegal goods and services. You could purchase bomb making equipment, hire a hitman, or sell ten tons of cocaine and the U.S. government would have had a hard time tracking the purchases. So, they shut down the site. (I'm all for that, by the way! That's one of those times when the government did something positive.)

What else can you use it for? One couple is using bitcoins to travel the world! You can purchase goods and services with btc. There are several eBay type exchanges which only operate using the virtual currency. In addition, you can also use BTC to pay for services, such as SEO articles, tech support, website design, etc. Currently, the market is based around the technical and IT industry but it is growing.

In fact, BTC is becoming so popular, that real world stores are starting to accept it as payment as well. Tiger Direct and Overstock.com both accept bitcoins, as well as  many casinos in Las Vegas. (This will make it more difficult for the Feds to control Internet gambling!)

You can also use btc to purchase prepaid debit cards, which enables you to use your currency absolutely anywhere that accepts Visa and Mastercard!

You can pay somebody or be paid by somebody in btc for just about anything now. Here's the rub though.

Dana, you make this stuff sound GREAT! What's the catch?

You gotta be careful. Recently, an exchange in Thailand shut it's doors for no reason, and the consumers using that exchange lost 4.1 million dollars. Wow. That's a lot! These things do happen so you need to do your research.

In May, Maryland authorities shut down an exchange there and took it's assets. They're prosecuting the owner now. He himself was buying and selling btc. It's not clear if the money seized was his own or his customer's.

India also doesn't like btc either. They recently ordered all exchanges to shut down immediately! In short, no government actually likes this currency but shutting down exchanges won't really stop it, and retailers know this.

In reality, the best exchange system would be one where the buyers and sellers are interacting directly with each other and the person operating the exchange gets a cut. The SL linden exchange works much like this. Someone says "I want USD," and another person says "I want BTC." They get together, and trade. Linden Labs gets their cut and everyone is happy. There are a few BTC exchanges which operate like this.

Bitcoins are not government regulated!

I had to make sure that was clear. Remember, before government regulations, people were opening banks, gathering huge deposits, then shutting down and running with the money. It is possible to do that with bitcoins. Anytime you hand them your money and ask them to hold onto it for you, they can leave with it! Don't take that risk if you can't afford to.

Don't invest all of your money into BTC, but don't ignore it as a growing currency either. There is risk, but without risk, there would be no reward. Just be careful to minimize your risks as much as you can. Never invest more than you can afford to lose.