Investing in Bits and Bytess: Strategies for Making Money with Bitcoins
by Brian Clette
Historically the value of any country's currency has come from the fact that that currency has been backed up by gold or some other precious metal. Meaning that a paper banknote of any particular denomination was worth a certain amount of gold and could be taken to any recognized bank or currency exchange and redeemed for its value in gold coins at least that was the case until August 15, 1971. When United States president Richard Nixon removed the United States, or rather "suspended" the direct convertibility standard of paper currency, meaning that a paper banknote could no longer be exchanged for its direct value in gold, and shortly thereafter. Several Western European countries such as England and France removed themselves from the gold standard as well and today no recognized government or country uses the gold standard, which essentially means that a country's currency only has value, because the government in power and the world economy says that it does. So what would we do if the stock market crashed tomorrow like it did in 1929? Or we begin to experience hyperinflation similar to the way Africa did in the late 1960s and early 1970s well fortunately for us, there are bitcoins a form of digital currency subject one government's whims for financial system. The value of the coins is determined more or less by the community of bitcoin users on any given day.