From Technology Review:
Can a booming "crypto-currency" really compete with conventional cash?
Wednesday, May 25, 2011
By Tom Simonite
QuoteRecent weeks have been exciting for a relatively new kind of currency speculator. In just three weeks, the total value of a unique new digital currency called Bitcoin has jumped four times, to over $40 million.
Bitcoin is underwritten not by a government, but by a clever cryptographic scheme.
For now, little can be bought with bitcoins, and the new currency is still a long way from competing with the dollar. But this explainer lays out what Bitcoin is, why it matters, and what needs to happen for it to succeed.
Whole article here: http://www.technologyreview.com/computing/37619/?a=f (http://www.technologyreview.com/computing/37619/?a=f)
It will be interesting to see if this works out. Anyone remember beenz?
http://en.wikipedia.org/wiki/Beenz.com
QuoteThe beenz business model was based upon arbitrage. Companies purchased beenz from the company at a locally determined exchange rate. They could then award these to consumers for actions to which the issuer attached value, such as making on-line purchases. Beenz were collected by the user clicking on a Java Applet and entering their email address linked to a beenz account. Consumers were then able to use their beenz to purchase goods from on-line merchants. Each merchant was free to exchange beenz at any notional value they liked, the company assuming that the market would settle the exchange value of each beenz. Merchants were then able to sell beenz back to the company itself at a pre-defined exchange rate. The company made its margin on the spread between the sell and the buy price of beenz in the market. In the later stages, a professional economist was employed to model the behaviour of prices and flows of money in this micro-economy, and keep it healthy.
I like the bitcoin concept, but I don't see any consumer protections such as PayPal offers. The seller is protected but not the buyer.
Still it's interesting, specifically because of having a fixed value currencey. They say it's no threat to the Dollar, but we'll see.
I also distrust the fact that there is a single, anonymous creator. What secrets lurk beneath the surface?
There aren't any protections. Bitcoin is only good for buying drugs off silkroad and paying the russian mafia for hits and sex slaves. They've been using e-currencies for their dirty work for a while now.
I'm guessing if some agency wanted to tank it, they'd throw some supercomputer it's generation matrix, make a ton of bitcoins and just tank it.
Didn't Carnegie-Mellon invent cybercash/digital wallets about two decades ago? Never went anywhere, I think because the major credit card companies suddenly realized that This Internet Thing had promise. Since then very few people have cared whether the transactions were anonymous. If anything I think people have even lower expectations of privacy these days; I'm not seeing who will be clamoring for bitcoins.
From cnet.com:
QuoteBitcoin, a peer-to-peer currency floating around the Web, is now being targeted by two prominent senators.
Democratic Senators Charles Schumer of New York and Joe Manchin of West Virginia have written a letter to both Attorney General Eric Holder and Drug Enforcement Administration (DEA) chief Michele Leonhart expressing their desire for the organizations to take down an online marketplace known as "Silk Road," which allows customers to buy illegal drugs, including cocaine, heroin, ecstasy, and marijuana.
Read more: http://news.cnet.com/8301-13506_3-20070268-17/senators-target-bitcoin-currency-citing-drug-sales/#ixzz1PAnxanL1
I never go on tor or the darknet stuff but from what I've heard, silk road stopped operations for a few days, mainly in reaction to all this media attention and the instability of bitcoins, which in turn caused bitcoins to go from about $35 each to around $9 at the low point and it's been all over the place ever since. The crazy thing is that if you actually started mining these things when they first came out a couple of years ago, you had the potential to become extremely wealthy these past couple of weeks but if you read the bitcoin forums, you'll see people who have lost thousands and thousands of dollars in things as simple as hard drive crashes because there is no centralization or monitoring of it. There's also been some really fishy stuff going on with the money exchange sites, people claiming that they tried to cash in 200 of them and the site just returns an error and their money is gone- again because there's no protections or trails to follow.
The whole thing is pretty interesting. Another fun thing to think about is how some hired eastern european killer is going to react when his payment lost 2/3 of it's value overnight.