Bitcoins: No easy answer, extension agents say

Staff Writer

A new kind of money that will change the way we live or an unregulated phenomenon that's not likely to be around in a few years?

That's Bitcoin and the more than 20 other digital or so-called crypto-currencies that have gotten far enough into society that Webster's recognized the term as an official word this year.

But the debate over it's future is just getting started, two Mississippi State University extension professionals told a group Wednesday.

"It's really hard to find someone who believes in it wholeheartedly," Lauren-Colby Nickels told the group.

To those accustomed to dealing with paper currency and coins, Bitcoins may seem almost imaginary because they aren't touchable. And only a few people -- called "miners " -- can generate them by solving complex math problems. Those "miners" also keep track of every Bitcoin transaction ever made worldwide, making up the decentralized monitoring system that has made the currency popular in some circles.

And by the founder's design in 2009, no more than 21 million Bitcoins can ever be generated. However, they can be divided up into eight decimal points, meaning a person can own or use a small fraction of a Bitcoin to make a transaction or stash away in their computerized "wallet" where Bitcoins are stored.

The currency's astronomical growth in value is one of the things that caught the attention of the populace, not to mention investors.

In 2014, a Bitcoin was worth $200. In the last two months, it has ranged as high as $19,000 although it was down to about $8,500 Wednesday. It can swing as much as $2,000 in a day, making using it as a currency difficult.

So far in the United States, not many companies or businesses accept Bitcoins and major financial institutions are steering clear. But the currency is more widely accepted in some other countries, particularly parts of Asia. Worldwide, Bitcoins are accepted in 62 countries.

Other popular financial mechanisms like pre-paid credit cards, Western Union wire transfers and PayPal all were questioned and scrutinized and yet have become part of everyday life, generating billions of dollars in business a year, Varner and Nickels noted.

"It's just the beginning, the blockchain software that is behind how Bitcoins work can change our lives forever," one promotional YouTube video played by Varner said, although they were quick not to endorse the currency.

Initially, Bitcoins were most widely used on the "Dark" Web, a secretive part of the Internet that has been a fertile trading ground for everything from thieves and drug dealers to human traffickers. The currency's lack of regulation and untraceability made it popular.

It first came to MSU's attention in late 2016 when a university computer fell victim to "ransomware" and the people behind the virus attack wanted to be paid in Bitcoins to return the stolen data. Similar attacks across the country served to put Bitcoin and its fellow digital currencies in the headlines.

The Internal Revenue Service has begun issuing rules for taxing Bitcoins and other currency and the profits -- or losses -- made from either creating or investing in them.

But as they get more attention, the currencies also create more concerns. China has banned the use of Bitcoins and similar currencies. Facebook announced this week it won't accept or deal in them.
Many recognized investors warn against putting money in Bitcoins because of the volatility, uncertainly and lack of regulation.

Because they are computer based, they also are susceptible to being hacked.

Those and other reasons make them very risky, many analysts warn, while others say investors can make "lots of money" quickly if they do it wisely.

"Isn't that what investing is all about, sort of legalized gambling. I would just be worried about tracking and getting my money in and out. That's the part that makes me wonder," said real estate agent Colin Krieger, one of those who attended Wednesday's seminar.