In response to Scott’s post on the introduction of a Bitcoin ATM in Vancouver. I respectfully disagree with his position because I believe that Bitcoins have the potential to revolutionize currency.

Like the Canadian dollar, Bitcoins are a type of fiat money. Unlike representative money (money backed by hard currency such as gold), fiat currencies are an artificial construction. The difference between Bitcoins and traditional currencies are its lack of central control. While Scott sees this as a drawback, I see it as advantageous.

Lack of central authority means that rather than having a banks control the money supply, authority rests in the hand of the digital currency’s users. Power is not limited to a single group such as the Fed, which can control the money supply at its convenience. Decentralized systems are much harder to manipulate. Additionally, they are harder to monitor, guaranteeing more privacy for consumers than Visa or Mastcard, which monitor consumer spending habits.

While Scott argues that PayPal already covers online purchases, Bitcoins take the middleman out of the equation. Last year, PayPal is had $5.6 billion in revenues and consumers pay for their services on every purchase, which would not apply to the use of Bitcoins online. The decentralized nature of Bitcoins is better overall for the anonymity and savings of consumers.