What is a Bitcoin?
Bitcoin is an innovative currency, whose presence is virtual and it consists of digital bits. Bitcoin was created in 2008-2009 and based on mathematical schemes with a cutting-edge style. The purpose of Bitcoin was to ensure protection against counterfeiting. However, Bitcoin has received severe criticism and it is often claimed that it has a volatile market value, its supply is too inflexible and it cannot be widely used in trade. Part of the controversy lies in the fact that a significant share of the commercial use of Bitcoins has been for gambling transactions and even illicit drugs. Still, most Bitcoin transactions are relatively anonymous which allows for a bigger economic freedom.
Bitcoin was started as a currency with a simple idea – to be free from any government control and to be used during the digital age for digital means. Its growth was so rapid that it is now a payment method on multiple websites, whether they are selling legal or illegal goods and services. The worth of the “coin” was less than $10 throughout most of its history, but 2013 has seen a surge in the Bitcoin value. One of the triggers for that surge was the unexpected bailout crisis in Cyprus. This led to the Bitcoin’s worth of up to $200. This meteoric rise is a reason for even more criticism from economists – the supply of bitcoins is rather slow, whereas the value is too volatile.
How it works
There is a big contrast between the Bitcoin economy and the U.S. economy for example. The supply of dollars is regulated by the Federal Reserve and it raises slightly faster than the actual growth of the economy, which leads to inflation each year. On the other hand, bitcoins are generated by computers and it’s harder to generate them at once. Nowadays, there are about 8 million in circulation and the maximum that can be “mined” is about 21 million. That being said, by the year 2032 about 99% of all coins will have already been produced and in circulation. What is good about this economy and those in power, is that the higher the demand, the higher the value (or also known as deflation). Deflation usually leads to one thing in real-world currencies though – a complete disaster. People hold onto their money, because they are more valuable and don’t spend which slows the economy to a significant extent.
In general, economists today assess the rising Bitcoin economy as quite similar to “gold standard”. Under the gold standard (before modern banking took over in the 1930s), each currency unit was worth an amount of gold. The gold standard is not used anymore, but many specialists see Bitcoin as reviving the old tradition, as a form of modern day alternative to it.
Recently India’s Supreme Court rejected Novartis’ patent application for Gleevec, a leukemia-curing drug. This allows local manufacturers to reproduce and sell the drug cheaper than Novartis. An article in The Atlantic broke the story with a deceptive title, Why Chemotherapy That Costs $70,000 in the U.S. Costs $2,500 in India, and bolded excerpts that would antagonize any reader, such as “Ninety percent of children with leukemia in high-income countries will be cured, but 90 percent of those with that disease in low-income countries will die from it.” But patents have existed for thousands of years and will continue to be needed in the near future. Patents promote innovation, risk, and entrepreneurial spirit; these are necessary in any economy. Pharmaceutical companies deserve to have their intellectual property protected. However, in the face of such decisions by India, such companies can no longer rely entirely on the monopolies created by patents. Now they must find a middle ground with consumers and forgo their desires for maximum profits. Perhaps in doing so, their legacy will be that they will be renowned for saving more lives, rather than making billions in profits.
My problems with the Atlantic article
Why does Gleevec, a leukemia drug that costs $70,000 per year in the United States, cost just $2,500 in India?