It’s an alternative to paper currencies. It can be traded anywhere in the world. It has a limited supply. And it should be a secure haven if financial markets start to crash. That is a fairly accurate description of gold. It is also an accurate description of bitcoin, the digital currency that is gaining in popularity all the time.
But here’s a puzzle. The price of gold has been falling for most of this year, and it would be a brave investor who called this as the bottom of the market. And yet the price of bitcoins has been soaring. The goldbugs will tell you that the price of gold is being suppressed — it would be a lot higher if it was not being manipulated downwards. Others will argue that bitcoin is a faddish bubble, a nerd-ish equivalent of 17th century Dutch tulips. Its soaring price tells us nothing — except that people are as easily fooled as they always have been.
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Bitcoin: Is the currency becoming more real?
Is bitcoin another flash in the pan? Or are the early investors onto something that will make them rich? WSJ's Jason Bellini has #TheShortAnswer.
The actual answer is more interesting. Clearly there is a demand for alternative currencies, and bitcoin is in many ways a better product for that market. The price divergence is an illustration of how bitcoin is edging gold GCG4 -0.35% out of the “alternative money” market — and that is hardly bullish for the precious yellow metal.
For the few people who have not yet heard of it, bitcoin is a purely digital currency, minted in limited quantities by a pre-determined algorithm. No one knows who invented it, and no one controls it. Right now, there are 11 million bitcoins in circulation, and the algorithm will eventually create around 21 million of them. And that will be the lot — production will stop, and there will be that amount of digital money available, and no more.
At the start of this year, you could pick up one of those bitcoins for $13. Looking back, that was the steal of the year. The virtual currency jumped to a record of $947 Tuesday on the trading exchange Mt. Gox.
The point about bitcoin is that it is designed to be all the things that gold was back when the precious metal was a currency. It has a limited supply. It is not controlled by governments or central banks. It is not anonymous, as some people occasionally claim, but it is a lot more private than money held in a bank account. It is a store of value.
2013年12月1日 星期日
Bitcoin Tops $1,000 for the First Time
The price of bitcoins topped $1,000 Wednesday on Mt. Gox, the second largest exchange by volume, marking the first time its price has hit four digits.
Bitcoin first hit $100 in April and quickly doubled that same month. The price has increased fivefold in the seven months since, but it has also experienced significant fluctuations amid uncertainty about the viability of the digital currency.
Bitcoin first hit $100 in April and quickly doubled that same month. The price has increased fivefold in the seven months since, but it has also experienced significant fluctuations amid uncertainty about the viability of the digital currency.
Tipping Point: Bitcoin Passes Value of an Ounce of Gold
On Friday the decentralised crypto-currency Bitcoin, which passed the $1,000 (£611, €735) mark earlier this week, was briefly worth more than an ounce of gold, which will be seen by many supporters of the currency as a symbolic tipping point in the rise of the digital currency.
Bitcoin today hit a high of $1,242 on Mt Gox, the world's biggest bitcoin exchange, beating the price of gold which was $1,241.98 at the time. At the time of publication, bitcoin's value on the exchange has dropped back to around $1,160 while an ounce of gold remains relatively steady at $1,247.
The mysterious currency, which is not governed or regulated by any central bank, has gained widespread media attention this year due to its surging value - along with multi-million dollar thefts of the digital coins - and its associations with the darker parts of the web.
Bitcoin today hit a high of $1,242 on Mt Gox, the world's biggest bitcoin exchange, beating the price of gold which was $1,241.98 at the time. At the time of publication, bitcoin's value on the exchange has dropped back to around $1,160 while an ounce of gold remains relatively steady at $1,247.
The mysterious currency, which is not governed or regulated by any central bank, has gained widespread media attention this year due to its surging value - along with multi-million dollar thefts of the digital coins - and its associations with the darker parts of the web.
When You Buy Pizza With Bitcoins, This Man Makes Money
Imagine selling lemonade on the street for £5. Imagine storing that hard-earned money in a jar and doing jack shit for a week. Suddenly, the money in your jar has grown to £50. Now imagine we're not talking about a couple of pounds, but millions. That’s sort of the situation Anthony Gallippi has found himself in.
He’s the CEO of BitPay, a company that makes it easier for pizza places, indie designers, and anarcho web providers to accept Bitcoin. Instead of having to pull out a credit card or log into Paypal and deposit money there, his software leads the consumer through an easy step-by-step interface that let’s them pay in the cryptocurrency. BitPay pays the merchant in euros, dollars or pound, while your bitcoins go to them.
But the value of those bitcoins has risen about a 1000 percent over the last month. So these are happy times for Gallippi and his company. He was kind enough to talk to us right at the start of the American holiday shopping season.
He’s the CEO of BitPay, a company that makes it easier for pizza places, indie designers, and anarcho web providers to accept Bitcoin. Instead of having to pull out a credit card or log into Paypal and deposit money there, his software leads the consumer through an easy step-by-step interface that let’s them pay in the cryptocurrency. BitPay pays the merchant in euros, dollars or pound, while your bitcoins go to them.
But the value of those bitcoins has risen about a 1000 percent over the last month. So these are happy times for Gallippi and his company. He was kind enough to talk to us right at the start of the American holiday shopping season.
Link between 'Satoshi' bitcoin account and the Silk Road dissolves
A research paper speculating Bitcoin’s creator may have transferred $60,000 to the Silk Road marketplace has been dispelled, as the account holder in question came forward on Tuesday, denying he is the mysterious Satoshi Nakamoto.
Dustin Trammell, a security researcher who is CEO of the vulnerability marketplace ExploitHub, wrote in a blog post that the Israeli researchers failed in their analysis, which was subject to blistering criticism from the bitcoin community.
“I hope this puts to rest any further speculation regarding whether or not I am Satoshi Nakamoto and whether or not I have had any involvement with the Silk Road,” Trammell wrote. “I am not and have not.”
The paper was written by Adi Shamir and Dorit Ron of the Weizmann Institute of Science in Israel. Shamir is a noted cryptographer credited with co-creating the RSA encryption algorithm, which is widely used to protect corporate data.
In an email to IDG News Service, Shamir defended their work, writing that “we were extremely careful in our choice of words and repeatedly stressed that we have no proof.”
But later on Wednesday, Shamir wrote in an email that after reading Trammell’s blog post, the paper would be revised.
In four paragraphs at the end of their 13-page paper, Shamir and Ron described a 1,000-bitcoin transaction, worth around $60,000 at the time, sent in March. It came from a bitcoin account established just a week after the system launched in 2009, a so-called “founder” account.
Many of the early bitcoin accounts are believed to be controlled by the person who supposedly created Bitcoin, who used “Satoshi Nakamoto” as a pseudonym.
Their analysis claimed the virtual currency eventually ended up in another account belonging to DPR, short for “Dread Pirate Roberts,” who controlled the Silk Road marketplace. U.S. federal prosecutors allege DPR is 29-year-old Ross William Ulbricht, who faces murder-for-hire, narcotics trafficking and computer hacking charges.
Trammell wrote that he sent the 1,000 bitcoins to Mt. Gox, the Tokyo-based bitcoin exchange, “for trading purposes.”
“Mt. Gox should be able to easily confirm that they indeed control this destination address,” he wrote.
Trammell’s explanation is “completely believable, and thus we no longer believe that the very early founder account we identified in the full bitcoin transaction graph belongs to Satoshi Nakamoto,” Shamir wrote. “We will revise our paper accordingly.”
Although the researchers hedged on the claim, their wording in the paper was strong enough to suggest that they might have spotted something stunning.
“The short path we found suggests (but does not prove) the existence of a surprising link between the two mysterious figures of the Bitcoin community, Satoshi Nakamoto and DPR.”
The paper touched off a firestorm of criticism on Reddit. By studying Bitcoin’s public ledger of transactions, called the “blockchain,” commentators quickly cast doubt on it.
“The paper is complete crap,” wrote Jeff Garzik, a software engineer who has extensive experience with Bitcoin, in an email to IDG.
Bitcoin’s blockchain is public and transparent, showing all transactions since the system was launched. But following the flow of bitcoins can get tricky, especially if “mixing” services are used, which create spider web-like transaction trails.
Dustin Trammell, a security researcher who is CEO of the vulnerability marketplace ExploitHub, wrote in a blog post that the Israeli researchers failed in their analysis, which was subject to blistering criticism from the bitcoin community.
“I hope this puts to rest any further speculation regarding whether or not I am Satoshi Nakamoto and whether or not I have had any involvement with the Silk Road,” Trammell wrote. “I am not and have not.”
The paper was written by Adi Shamir and Dorit Ron of the Weizmann Institute of Science in Israel. Shamir is a noted cryptographer credited with co-creating the RSA encryption algorithm, which is widely used to protect corporate data.
In an email to IDG News Service, Shamir defended their work, writing that “we were extremely careful in our choice of words and repeatedly stressed that we have no proof.”
But later on Wednesday, Shamir wrote in an email that after reading Trammell’s blog post, the paper would be revised.
In four paragraphs at the end of their 13-page paper, Shamir and Ron described a 1,000-bitcoin transaction, worth around $60,000 at the time, sent in March. It came from a bitcoin account established just a week after the system launched in 2009, a so-called “founder” account.
Many of the early bitcoin accounts are believed to be controlled by the person who supposedly created Bitcoin, who used “Satoshi Nakamoto” as a pseudonym.
Their analysis claimed the virtual currency eventually ended up in another account belonging to DPR, short for “Dread Pirate Roberts,” who controlled the Silk Road marketplace. U.S. federal prosecutors allege DPR is 29-year-old Ross William Ulbricht, who faces murder-for-hire, narcotics trafficking and computer hacking charges.
Trammell wrote that he sent the 1,000 bitcoins to Mt. Gox, the Tokyo-based bitcoin exchange, “for trading purposes.”
“Mt. Gox should be able to easily confirm that they indeed control this destination address,” he wrote.
Trammell’s explanation is “completely believable, and thus we no longer believe that the very early founder account we identified in the full bitcoin transaction graph belongs to Satoshi Nakamoto,” Shamir wrote. “We will revise our paper accordingly.”
Although the researchers hedged on the claim, their wording in the paper was strong enough to suggest that they might have spotted something stunning.
“The short path we found suggests (but does not prove) the existence of a surprising link between the two mysterious figures of the Bitcoin community, Satoshi Nakamoto and DPR.”
The paper touched off a firestorm of criticism on Reddit. By studying Bitcoin’s public ledger of transactions, called the “blockchain,” commentators quickly cast doubt on it.
“The paper is complete crap,” wrote Jeff Garzik, a software engineer who has extensive experience with Bitcoin, in an email to IDG.
Bitcoin’s blockchain is public and transparent, showing all transactions since the system was launched. But following the flow of bitcoins can get tricky, especially if “mixing” services are used, which create spider web-like transaction trails.
Bitcoin keeps surging, taps new record atop $1,200
MADRID (MarketWatch) -- Bitcoin continued to push higher Friday, touching a new record of $1,242 before pulling back to around $1,183. The virtual currency took out Wednesday's $1,000 high on Thanksgiving Day. The run-up for bitcoin got new life after a congressional hearing earlier this month that effectively gave the currency an official blessing. The currency also elbowed into the holiday shopping season with its own Bitcoin Black Friday promotion involving hundreds of merchants.
Is Bitcoin About To Change The World?
The past weeks have seen a surprising meeting of minds between chairman of the US Federal Reserve Ben Bernanke, the Bank of England, the Olympic-rowing and Zuckerberg-bothering Winklevoss twins, and the US Department of Homeland Security. The connection? All have decided it's time to take Bitcoin seriously.
Until now, what pundits called in a rolling-eye fashion "the new peer-to-peer cryptocurrency" had been seen just as a digital form of gold, with all the associated speculation, stake-claiming and even "mining"; perfect for the digital wild west of the internet, but no use for real transactions.
Bitcoins are mined by computers solving fiendishly hard mathematical problems. The "coin" doesn't exist physically: it is a virtual currency that exists only as a computer file. No one computer controls the currency. A network keeps track of all transactions made using Bitcoins but it doesn't know what they were used for – just the ID of the computer "wallet" they move from and to.
Right now the currency is tricky to use, both in terms of the technological nous required to actually acquire Bitcoins, and finding somewhere to spend them. To get them, you have to first set up a wallet, probably online at a site such as Blockchain.info, and then pay someone hard currency to get them to transfer the coins into that wallet.
A Bitcoin payment address is a short string of random characters, and if used carefully, it's possible to make transactions anonymously. That's what made it the currency of choice for sites such as the Silk Road and Black Market Reloaded, which let users buy drugs anonymously over the internet. It also makes it very hard to tax transactions, despite the best efforts of countries such as Germany, which in August declared that Bitcoin was "private money" in which transactions should be taxed as normal.
It doesn't have all the advantages of cash, though the fact you can't forge it is a definite plus: Bitcoin is "peer-to-peer" and every coin "spent" is authenticated with the network. Thus you can't spend the same coin in two different places. (But nor can you spend it without an internet connection.) You don't have to spend whole Bitcoins: each one can be split into 100m pieces (each known as a satoshi), and spent separately.
Although most people have now vaguely heard of Bitcoin, you're unlikely to find someone outside the tech community who really understands it in detail, let alone accepts it as payment. Nobody knows who invented it; its pseudonymous creator, Satoshi Nakamoto, hasn't come forward. He or she may not even be Japanese but certainly knows a lot about cryptography, economics and computing.
Until now, what pundits called in a rolling-eye fashion "the new peer-to-peer cryptocurrency" had been seen just as a digital form of gold, with all the associated speculation, stake-claiming and even "mining"; perfect for the digital wild west of the internet, but no use for real transactions.
Bitcoins are mined by computers solving fiendishly hard mathematical problems. The "coin" doesn't exist physically: it is a virtual currency that exists only as a computer file. No one computer controls the currency. A network keeps track of all transactions made using Bitcoins but it doesn't know what they were used for – just the ID of the computer "wallet" they move from and to.
Right now the currency is tricky to use, both in terms of the technological nous required to actually acquire Bitcoins, and finding somewhere to spend them. To get them, you have to first set up a wallet, probably online at a site such as Blockchain.info, and then pay someone hard currency to get them to transfer the coins into that wallet.
A Bitcoin payment address is a short string of random characters, and if used carefully, it's possible to make transactions anonymously. That's what made it the currency of choice for sites such as the Silk Road and Black Market Reloaded, which let users buy drugs anonymously over the internet. It also makes it very hard to tax transactions, despite the best efforts of countries such as Germany, which in August declared that Bitcoin was "private money" in which transactions should be taxed as normal.
It doesn't have all the advantages of cash, though the fact you can't forge it is a definite plus: Bitcoin is "peer-to-peer" and every coin "spent" is authenticated with the network. Thus you can't spend the same coin in two different places. (But nor can you spend it without an internet connection.) You don't have to spend whole Bitcoins: each one can be split into 100m pieces (each known as a satoshi), and spent separately.
Although most people have now vaguely heard of Bitcoin, you're unlikely to find someone outside the tech community who really understands it in detail, let alone accepts it as payment. Nobody knows who invented it; its pseudonymous creator, Satoshi Nakamoto, hasn't come forward. He or she may not even be Japanese but certainly knows a lot about cryptography, economics and computing.
Why Some Holiday Shoppers Are Spending Bitcoin This Black Friday
Bitcoin—the currency of choice for buying illegal goods online—has cultivated quite the bad-boy image. But some entrepreneurs believe a wholesome makeover could take this unregulated digital currency mainstream, and what could be more wholesome than holiday shopping?
On Black Friday, Bitcoin boosters are urging shoppers to ditch their credit cards and open up their Bitcoin wallets. And shoppers like David Allison are doing just that. He's been giving a lot of thought to what he'll buy for his wife this Christmas.
"My wife and I are expecting a baby in March," he says. "And I know she loves the concept of nesting."
He's been eyeing a piece of jewelry he found on a site called Bitdazzle. It's called a "Nesting Together" necklace. The product image shows three little metallic eggs nestling inside coiled silver wire, kind of like a tiny bird's nest with chicks ready to hatch.
"It's pretty cute, and I think that she'd like it," Allison says, hovering over the "Add To Cart" button. "Bitdazzle shows me, too, that it's 0.042 Bitcoin."
Or $34. A nice stocking stuffer, he says. Especially because he's essentially getting it for free.
About a year ago, Allison earned himself one Bitcoin. He didn't pay for it. He got it through a process called mining. Basically, he programmed his computer to solve really tricky puzzles while he slept. Back then, one Bitcoin was worth a measly $10 or so. But by the time I interviewed Allison, his Bitcoin had skyrocketed to nearly $800.
"I've just held them," he says. "I saw the value continuously increasing. But now it does seem like a great time to spend."
Allison thinks it's a great time to spend because now he can actually buy things he wants.
Online drug dens like the infamous Silk Road have been shut down, and mainstream Bitcoin markets like Bitdazzle are popping up in their place, offering crafty, legal products like handmade soaps, jewelry and other gift-worthy knick-knacks.
Hieu Bui is one of the entrepreneurs behind Bitdazzle. He's the CEO of a startup based in downtown San Diego. (Full disclosure: Allison and Bui both work at the same startup incubator, but for different companies. They're not close friends outside of the startup scene.)
Bui sees mainstream potential for Bitcoin, but only if it can shed its negative associations. He says his company is proactive about keeping Bitdazzle legit.
"Everyday, our team that you see behind me actually looks through every merchant who signed up, all their products and we ban things that aren't above board," Bui says.
But if everything's on the up-and-up, why should shoppers use Bitcoin at all? If they don't need to be untraceable while buying stuff that could land them in jail, what's the point?
On Black Friday, Bitcoin boosters are urging shoppers to ditch their credit cards and open up their Bitcoin wallets. And shoppers like David Allison are doing just that. He's been giving a lot of thought to what he'll buy for his wife this Christmas.
"My wife and I are expecting a baby in March," he says. "And I know she loves the concept of nesting."
He's been eyeing a piece of jewelry he found on a site called Bitdazzle. It's called a "Nesting Together" necklace. The product image shows three little metallic eggs nestling inside coiled silver wire, kind of like a tiny bird's nest with chicks ready to hatch.
"It's pretty cute, and I think that she'd like it," Allison says, hovering over the "Add To Cart" button. "Bitdazzle shows me, too, that it's 0.042 Bitcoin."
Or $34. A nice stocking stuffer, he says. Especially because he's essentially getting it for free.
About a year ago, Allison earned himself one Bitcoin. He didn't pay for it. He got it through a process called mining. Basically, he programmed his computer to solve really tricky puzzles while he slept. Back then, one Bitcoin was worth a measly $10 or so. But by the time I interviewed Allison, his Bitcoin had skyrocketed to nearly $800.
"I've just held them," he says. "I saw the value continuously increasing. But now it does seem like a great time to spend."
Allison thinks it's a great time to spend because now he can actually buy things he wants.
Online drug dens like the infamous Silk Road have been shut down, and mainstream Bitcoin markets like Bitdazzle are popping up in their place, offering crafty, legal products like handmade soaps, jewelry and other gift-worthy knick-knacks.
Hieu Bui is one of the entrepreneurs behind Bitdazzle. He's the CEO of a startup based in downtown San Diego. (Full disclosure: Allison and Bui both work at the same startup incubator, but for different companies. They're not close friends outside of the startup scene.)
Bui sees mainstream potential for Bitcoin, but only if it can shed its negative associations. He says his company is proactive about keeping Bitdazzle legit.
"Everyday, our team that you see behind me actually looks through every merchant who signed up, all their products and we ban things that aren't above board," Bui says.
But if everything's on the up-and-up, why should shoppers use Bitcoin at all? If they don't need to be untraceable while buying stuff that could land them in jail, what's the point?
Did Satoshi Nakamoto transfer 1,000 bitcoins to the Silk Road?
Two computer scientists in Israel say a bitcoin transaction now worth more than $1 million suggests a possible link between a creator of the virtual currency and Ross William Ulbricht, the 29-year-old accused of running the Silk Road underground online marketplace.
The 1,000-bitcoin transfer was found during an analysis of the movement of the Silk Road’s bitcoins, according to a forthcoming research paper written by Adi Shamir and Dorit Ron of the Weizmann Institute of Science.
The finding suggests a partnership or investment in the Silk Road on the part of someone involved very early on in Bitcoin “but this is pure speculation,” the researchers wrote.
The amount was transferred on March 20 from an account established just a week after the bitcoin network launched in January 2009. Early bitcoin accounts are believed to be controlled by Satoshi Nakamoto, a pseudonym for the person or group of people who created Bitcoin.
The receiving account has been linked to “DPR,” short for “Dread Pirate Roberts,” the operator of the Silk Road who authorities alleged is Ulbricht. The bitcoins were worth about $60,000 at the time, but the price of bitcoin has since surged.
“The short path we found suggests (but does not prove) the existence of a surprising link between the two mysterious figures of the Bitcoin community, Satoshi Nakamoto and DPR,” they wrote.
Nakamoto’s real identity has never been uncovered despite attempts to figure out who has the cryptography and mathematical skills to create such a system. He stopped writing posts on a bitcoin forum in 2010.
The 1,000-bitcoin transfer was found during an analysis of the movement of the Silk Road’s bitcoins, according to a forthcoming research paper written by Adi Shamir and Dorit Ron of the Weizmann Institute of Science.
The finding suggests a partnership or investment in the Silk Road on the part of someone involved very early on in Bitcoin “but this is pure speculation,” the researchers wrote.
The amount was transferred on March 20 from an account established just a week after the bitcoin network launched in January 2009. Early bitcoin accounts are believed to be controlled by Satoshi Nakamoto, a pseudonym for the person or group of people who created Bitcoin.
The receiving account has been linked to “DPR,” short for “Dread Pirate Roberts,” the operator of the Silk Road who authorities alleged is Ulbricht. The bitcoins were worth about $60,000 at the time, but the price of bitcoin has since surged.
“The short path we found suggests (but does not prove) the existence of a surprising link between the two mysterious figures of the Bitcoin community, Satoshi Nakamoto and DPR,” they wrote.
Nakamoto’s real identity has never been uncovered despite attempts to figure out who has the cryptography and mathematical skills to create such a system. He stopped writing posts on a bitcoin forum in 2010.
Bitcoin digital currency tops $1,000 as acceptance grows http://www.latimes.com/business/money/la-fi-mo-bitcoin-tops-1000-20131127,0,2685716.story#ixzz2mHiwlpME
Bitcoin, the unregulated digital currency that once was valued at $10, hit a record Wednesday, trading above $1,000 per bitcoin on the Mt. Gox online exchange.
Speculators from China and the U.S. have been snapping up the digital currency as it becomes a more popular form of payment.
Demand has been strong in China where Baidu, a popular online search engine, accepts bitcoin as payment for services.
The digital currency has been rising steadily over the past few months and it has become more widely accepted. Virgin Galactic, the firm that aims to send tourists to space, announced this week it will accept bitcoin as payment for travel.
The University of Nicosia in the island nation of Cyprus said recently it will accept the virtual currency bitcoin as payment for tuition and other school fees. The largest university in Cyprus, the school said it will also offer a master's degree in digital currency next spring designed to increase understanding of "the technical underpinnings of digital currency."
Earlier this month, the U.S. Senate Committee on Homeland Security and Governmental Affairs held a hearing where officials urged greater oversight of bitcoin after the Federal Bureau of Investigations shut down Silk Road, an illicit online marketplace for drugs and other services where bitcoin was the preferred form of payment.
Speculators from China and the U.S. have been snapping up the digital currency as it becomes a more popular form of payment.
Demand has been strong in China where Baidu, a popular online search engine, accepts bitcoin as payment for services.
The digital currency has been rising steadily over the past few months and it has become more widely accepted. Virgin Galactic, the firm that aims to send tourists to space, announced this week it will accept bitcoin as payment for travel.
The University of Nicosia in the island nation of Cyprus said recently it will accept the virtual currency bitcoin as payment for tuition and other school fees. The largest university in Cyprus, the school said it will also offer a master's degree in digital currency next spring designed to increase understanding of "the technical underpinnings of digital currency."
Earlier this month, the U.S. Senate Committee on Homeland Security and Governmental Affairs held a hearing where officials urged greater oversight of bitcoin after the Federal Bureau of Investigations shut down Silk Road, an illicit online marketplace for drugs and other services where bitcoin was the preferred form of payment.
Bitcoin value soars above $1,000 on Mt. Gox exchange
The dollar value of a single Bitcoin is on the rise.
Mt. Gox, a popular exchange for Bitcoin traders, has seen the conversion rate on its service explode over the last several weeks. On Wednesday, Bitcoin trading surpassed the $1,000 mark on Mt. Gox, hitting a high of $1,073.
Bitcoin currency trading has become a popular enterprise. Consumers head to exchanges like Mt. Gox and others and give up a certain amount of their local currency for a single Bitcoin. Because Bitcoin is decentralized, conversion rates can vary between exchanges. Mt. Gox, for example, tends to offer a slightly higher value than other exchanges.
Still, Mt. Gox's latest trading underscores the rapidly increasing popularity of Bitcoin. At the beginning of November, the currency conversion for US dollars was hovering at around $200 per Bitcoin. In just the last four weeks, it's up to more than $1,000 with no sign of slowing down.
Trading Bitcoins has become sport for many of tech's biggest names. The Winklevoss twins have been the foremost supporters of Bitcoin and are believed to have invested a collective $11 million in Bitcoins. That was long before Bitcoin hit its recent highs.
Mt. Gox, a popular exchange for Bitcoin traders, has seen the conversion rate on its service explode over the last several weeks. On Wednesday, Bitcoin trading surpassed the $1,000 mark on Mt. Gox, hitting a high of $1,073.
Bitcoin currency trading has become a popular enterprise. Consumers head to exchanges like Mt. Gox and others and give up a certain amount of their local currency for a single Bitcoin. Because Bitcoin is decentralized, conversion rates can vary between exchanges. Mt. Gox, for example, tends to offer a slightly higher value than other exchanges.
Still, Mt. Gox's latest trading underscores the rapidly increasing popularity of Bitcoin. At the beginning of November, the currency conversion for US dollars was hovering at around $200 per Bitcoin. In just the last four weeks, it's up to more than $1,000 with no sign of slowing down.
Trading Bitcoins has become sport for many of tech's biggest names. The Winklevoss twins have been the foremost supporters of Bitcoin and are believed to have invested a collective $11 million in Bitcoins. That was long before Bitcoin hit its recent highs.
Bitcoin’s skyrocketing value ushers in era of $1 million hacker heists
A company billing itself as one of Europe's biggest Bitcoin exchanges said it suffered a coordinated attack that succeeded in stealing almost $1 million worth of the digital currency, marking the latest in a string of high-stakes heists hitting companies that hold large sums online.
Kris Henriksen, CEO of Denmark-based Bitcoin Internet Payment Services (BIPS), made that claim last week in a Web post that said the attack began as a distributed denial-of-service (DDoS) attack. Two days later, Henriksen said, the same attackers targeted the BIPS network again and managed to use the damage they previously inflicted to somehow tamper with the channel that connects BIPS data storage systems to company servers.
"On November 15, BIPS was the target of a massive DDoS attack, which is now believed to have been the initial preparation for a subsequent attack on November 17 that overloaded our managed switches and disconnected the iSCSI connection to the SAN on BIPS servers," the CEO wrote. "Regrettably, despite several layers of protection, the attack caused vulnerability to the system, which has then enabled the attacker/s to gain access and compromise several wallets."
The missing funds totaled 1,295 BTC, or about $1 million, according to a post on Coindesk, which cited this block in the official Bitcoin ledger. BIPS quickly closed its Bitcoin wallet service for consumers after discovering the theft. It advised existing users to transfer their bitcoins to competing wallet services and pledged to notify all users affected by the security breach.
The BIPS attack is at least the third major heist to hit Bitcoin services this month. In early November, the founder of Australia-based inputs.io said the service was robbed of 4,100 bitcoins—valued at about $1.2 million—in two separate attacks. China-based Bitcoin exchange GBL reportedly vanished with $4.1 million worth of customers' digital currency. Another Chinese exchange, BTC China, has also sustained massive DDoS attacks that are costing it dearly, according to an article published Tuesday by Wired.
Bitcoin heists that use malware, social engineering, or hacks to steal huge numbers of bitcoins are by no means new. But given the recent surge in the value of the digital currency, the proceeds of such attacks have mushroomed. Large-scale attacks that previously generated revenue measured in the tens of thousands or hundreds of thousands of dollars are now worth millions.
Kris Henriksen, CEO of Denmark-based Bitcoin Internet Payment Services (BIPS), made that claim last week in a Web post that said the attack began as a distributed denial-of-service (DDoS) attack. Two days later, Henriksen said, the same attackers targeted the BIPS network again and managed to use the damage they previously inflicted to somehow tamper with the channel that connects BIPS data storage systems to company servers.
"On November 15, BIPS was the target of a massive DDoS attack, which is now believed to have been the initial preparation for a subsequent attack on November 17 that overloaded our managed switches and disconnected the iSCSI connection to the SAN on BIPS servers," the CEO wrote. "Regrettably, despite several layers of protection, the attack caused vulnerability to the system, which has then enabled the attacker/s to gain access and compromise several wallets."
The missing funds totaled 1,295 BTC, or about $1 million, according to a post on Coindesk, which cited this block in the official Bitcoin ledger. BIPS quickly closed its Bitcoin wallet service for consumers after discovering the theft. It advised existing users to transfer their bitcoins to competing wallet services and pledged to notify all users affected by the security breach.
The BIPS attack is at least the third major heist to hit Bitcoin services this month. In early November, the founder of Australia-based inputs.io said the service was robbed of 4,100 bitcoins—valued at about $1.2 million—in two separate attacks. China-based Bitcoin exchange GBL reportedly vanished with $4.1 million worth of customers' digital currency. Another Chinese exchange, BTC China, has also sustained massive DDoS attacks that are costing it dearly, according to an article published Tuesday by Wired.
Bitcoin heists that use malware, social engineering, or hacks to steal huge numbers of bitcoins are by no means new. But given the recent surge in the value of the digital currency, the proceeds of such attacks have mushroomed. Large-scale attacks that previously generated revenue measured in the tens of thousands or hundreds of thousands of dollars are now worth millions.
Bitcoin Black Friday Goes Live and Other News You Need to Know
Welcome to this morning's edition of "First To Know," a series in which we keep you in the know on what's happening in the digital world.
Today, we're looking at three particularly interesting stories. Starting today, more than 400 retailers are coming together to open Bitcoin Black Friday, a web marketplace that only accepts Bitcoin as payment. If your shopping plans are more traditional, though, Apple’s seasonal deals are now live on its website. And finally, some Microsoft news: insiders tell Bloomberg the company’s board is narrowing down its search for its next CEO.
Today, we're looking at three particularly interesting stories. Starting today, more than 400 retailers are coming together to open Bitcoin Black Friday, a web marketplace that only accepts Bitcoin as payment. If your shopping plans are more traditional, though, Apple’s seasonal deals are now live on its website. And finally, some Microsoft news: insiders tell Bloomberg the company’s board is narrowing down its search for its next CEO.
This The Bitcoin Rout That Was Bound To Happen?
Bitcoin is in freefall this morning as liquidation (volume has picked up during the selling) seems to be taking place after the brief foray with Gold parity over the weekend.
At 1 am AEDT this morning Bitcoins were fetching the still heady price of $1150 US dollars but right now they are trading at $846 and falling so fast it’s hard to get an up-to-date chart.
At 1 am AEDT this morning Bitcoins were fetching the still heady price of $1150 US dollars but right now they are trading at $846 and falling so fast it’s hard to get an up-to-date chart.
Retailers set to offer Bitcoin Black Friday deals
Bitcoin users will be able to use their encrypted digital currency to pick up some deals on Black Friday.
A new site has popped up, called Bitcoin Friday, that lists all of the Black Friday deals retailers are offering around the Web. The deals include the ability to buy a discount on Reddit Gold with Bitcoin, as well as discounted unlocked handsets from GSM Nation. Cheapair is offering reduced prices on flights to Bitcoin users.
Bitcoin has found itself at the middle of a controversy in the digital currency arena. Some consumers view it as an important alternative to traditional currency. Some lawmakers, however, have expressed concern with the encrypted Bitcoin, saying that it is used to buy products away from the prying eyes of law enforcement.
Regardless, Bitcoin is being embraced more and more. And Black Friday deals for Bitcoin users seem to make that abundantly clear.
A new site has popped up, called Bitcoin Friday, that lists all of the Black Friday deals retailers are offering around the Web. The deals include the ability to buy a discount on Reddit Gold with Bitcoin, as well as discounted unlocked handsets from GSM Nation. Cheapair is offering reduced prices on flights to Bitcoin users.
Bitcoin has found itself at the middle of a controversy in the digital currency arena. Some consumers view it as an important alternative to traditional currency. Some lawmakers, however, have expressed concern with the encrypted Bitcoin, saying that it is used to buy products away from the prying eyes of law enforcement.
Regardless, Bitcoin is being embraced more and more. And Black Friday deals for Bitcoin users seem to make that abundantly clear.
'There are ideas to use Bitcoin to alleviate poverty' - expert
Georgios Papadopoulos is an economist and philosopher whose research gravitates toward money and its socioeconomic functions, says that “Bitcoin is relatively international, and there are some ideas to use it to alleviate poverty in the less developed countries, e.g. by making possible the transfer of funds from migrants who work in the rich countries to their families in the poorest regions of the world without having to pay the extortionate rates of banks and companies.” The Voice of Russia discussed the issue with Mr. Papadopoulos in an exclusive interview.
What are the ways to monetize Bitcoin, since it is not de facto a currency and is exchanged for traditional media of payment?
I guess the easiest way is that if you have a store and you have to sell something, you can accept Bitcoins. But usually people don’t have the facilities to do that. So, the way to do it actually or the most followed way is just go to a bureau of currencies and just buy Bitcoins by transferring money from your bank account or your credit card.
But I have to say that this is not the very good moment to do it, especially because of the volatility of the currency, but also because of the value of the currency and there are a lot of frauds now involved and a lot of people are trying to speculate or extract funds. So, you have to be extremely careful. But there are plenty of market places around, there is one also in Russia where Bitcoins can be exchanged for rubles, and almost everywhere in the developed world there are brokers where you can bring your money and buy Bitcoins.
Bitcoin is essentially a series of letters and number generated randomly, which means that the number of Bitcoins is finite. What are we to expect once it reaches its physical limit?
There already is an integrated limit in how much Bitcoins can be produced. And actually, the whole idea of the Bitcoin is to limit the supply of the currency. The longer we are going in time and the longer the life of Bitcoin is, the less Bitcoins are created. And actually, everybody can look online and see how many Bitcoins are going to be created in the future. And now, we are down to 12 054 000 Bitcoins that will be coined in the future.
And this somehow also explains the fact that the growth of the value of Bitcoin is somehow exponential, because the expectation is that as we go further in time, there will be less and less Bitcoins. With the growing demand it is obvious that the value is going to rise.
And actually, this is also a very interesting particularity of the Bitcoin. Instead of fixing its value to a particular major currency, the dollar or the euro, they instead fixed the amount of Bitcoins that are available. So, in that sense they safeguarded the value.
Bitcoin is gaining popularity in China, which has been in the news for the past couple of days. What prospects are there for Bitcoin going global?
Yes, this is true. And one of the biggest online stores in China – Baidu – has started to accept Bitcoins. But I think the main cause of the popularity of Bitcoin is of course the whole discussion about the speculation and the possibility a lot of people see to make money really fast. So, as long as this kind of bubble is unfolding and there is media, and visibility for the currency, we would see more and more people around the globe getting excited about it and even thinking about buying Bitcoins.
Read more: http://voiceofrussia.com/news/2013_11_30/There-are-ideas-to-use-Bitcoin-to-to-alleviate-poverty-expert-5490/
What are the ways to monetize Bitcoin, since it is not de facto a currency and is exchanged for traditional media of payment?
I guess the easiest way is that if you have a store and you have to sell something, you can accept Bitcoins. But usually people don’t have the facilities to do that. So, the way to do it actually or the most followed way is just go to a bureau of currencies and just buy Bitcoins by transferring money from your bank account or your credit card.
But I have to say that this is not the very good moment to do it, especially because of the volatility of the currency, but also because of the value of the currency and there are a lot of frauds now involved and a lot of people are trying to speculate or extract funds. So, you have to be extremely careful. But there are plenty of market places around, there is one also in Russia where Bitcoins can be exchanged for rubles, and almost everywhere in the developed world there are brokers where you can bring your money and buy Bitcoins.
Bitcoin is essentially a series of letters and number generated randomly, which means that the number of Bitcoins is finite. What are we to expect once it reaches its physical limit?
There already is an integrated limit in how much Bitcoins can be produced. And actually, the whole idea of the Bitcoin is to limit the supply of the currency. The longer we are going in time and the longer the life of Bitcoin is, the less Bitcoins are created. And actually, everybody can look online and see how many Bitcoins are going to be created in the future. And now, we are down to 12 054 000 Bitcoins that will be coined in the future.
And this somehow also explains the fact that the growth of the value of Bitcoin is somehow exponential, because the expectation is that as we go further in time, there will be less and less Bitcoins. With the growing demand it is obvious that the value is going to rise.
And actually, this is also a very interesting particularity of the Bitcoin. Instead of fixing its value to a particular major currency, the dollar or the euro, they instead fixed the amount of Bitcoins that are available. So, in that sense they safeguarded the value.
Bitcoin is gaining popularity in China, which has been in the news for the past couple of days. What prospects are there for Bitcoin going global?
Yes, this is true. And one of the biggest online stores in China – Baidu – has started to accept Bitcoins. But I think the main cause of the popularity of Bitcoin is of course the whole discussion about the speculation and the possibility a lot of people see to make money really fast. So, as long as this kind of bubble is unfolding and there is media, and visibility for the currency, we would see more and more people around the globe getting excited about it and even thinking about buying Bitcoins.
Read more: http://voiceofrussia.com/news/2013_11_30/There-are-ideas-to-use-Bitcoin-to-to-alleviate-poverty-expert-5490/
5 Facts You Should Read Before Buying Bitcoins
Bitcoin, the infamous cryptocurrency made popular by tech-savvy libertarians and others suspicious of economic centralization, often sparks passionate arguments about the nature of government, money, and markets.
Some believe that Bitcoin is a threat to society by creating opportunity for terrorists and criminals. Others believe it's the salvation of the market from government and special interests, redeeming money from centralized political control.
The truth, like usual, is a little more nuanced. Once we cut through some of the myths and fallacies, we'll see that cryptocurrencies are imperfect-but-useful currencies that will likely exist alongside other forms of money for some time.
1. Bitcoin is not just an "electronic version" of gold
Saying that Bitcoin is an "electronic version" of gold is extremely dangerous, because, while there are similarities between the two assets, there are extreme differences.
Bitcoins can be tracked, can't be melted down, and require different logistics for moving than gold or other hard assets.
The economics are simply different. Understanding this is necessary to spot other derivative myths, like the idea that, "Litecoin is Bitcoin's silver."
The only real similarities are a limited supply of the money that is supposedly "deflationary." The assets are very different and should be treated very differently.
Considering gold and silver have non-monetary uses -- especially silver -- the comparisons of cryptocurrencies to precious metals likely does more harm than good to our ability to understand either.
Some believe that Bitcoin is a threat to society by creating opportunity for terrorists and criminals. Others believe it's the salvation of the market from government and special interests, redeeming money from centralized political control.
The truth, like usual, is a little more nuanced. Once we cut through some of the myths and fallacies, we'll see that cryptocurrencies are imperfect-but-useful currencies that will likely exist alongside other forms of money for some time.
1. Bitcoin is not just an "electronic version" of gold
Saying that Bitcoin is an "electronic version" of gold is extremely dangerous, because, while there are similarities between the two assets, there are extreme differences.
Bitcoins can be tracked, can't be melted down, and require different logistics for moving than gold or other hard assets.
The economics are simply different. Understanding this is necessary to spot other derivative myths, like the idea that, "Litecoin is Bitcoin's silver."
The only real similarities are a limited supply of the money that is supposedly "deflationary." The assets are very different and should be treated very differently.
Considering gold and silver have non-monetary uses -- especially silver -- the comparisons of cryptocurrencies to precious metals likely does more harm than good to our ability to understand either.
The Bitcoin Continues to Gain Credibility From Merchants and the Fed
When Jeff Klee was asked by a client if his travel agency, CheapAir.com, would accept Bitcoins, he admitted he didn't even know what they were. He didn't know that thousands of merchants were already accepting them in payment for services and products, such as WordPress, OKCupid, and even Richard Branson’s Virgin Galactic on which Klee no doubt had already booked some of his clients.
Once he learned what they were, and found a digital “wallet” — Coinbase — to help him manage the transactions, he saw the marketing advantage: “We expect people to come to us especially because they can use Bitcoin.” Klee isn't taking much of a risk as more than 14,000 merchants already use Coinbase, which has opened up nearly half a million Bitcoin wallets for its customers. Said Klee: “If you have a lot of people accepting it, it becomes a useful and legitimate form of payment.”
That’s the ruling that Federal Judge Amos Mazzant made back in August when he said that “Bitcoin can be used as money. It can be used to purchase goods or services … it can also be exchanged for conventional currencies such as the U.S. dollar, Euro, Yen and Yuan.”
The Bitcoin gained some more credibility when the Senate Homeland Security and Governmental Affairs Committee invited six federal agencies to testify about it, along with numerous other interested parties. One of those “interested parties” was Federal Reserve Chairman Ben Bernanke, who sent the committee a letter expressing his view that such currencies as the Bitcoin “may hold long-term promise.” On that day the market value of the Bitcoin jumped $40 to $785. As of Tuesday, November 26, a Bitcoin was worth $840.
This was followed in short order by an article in the New York Times that asked rhetorically if the Bitcoin was just a passing fad, or if it had legs. The author found a skeptic who said that “In a matter of months you won’t be hearing about it. It will go the same way of Paris Hilton.”
Not if China has anything to say about it. On October 15 Baidu Jiasule, a firewall service for websites in China, announced that it would begin accepting Bitcoins for its services. This didn't happen in a vacuum, as Gordon Chang pointed out in Forbes magazine:
It is inconceivable that Baidu would permit the acceptance of Bitcoins without first clearing the matter with Beijing authorities.
At present there are almost 20 trading platforms handling Bitcoin transactions in China, and BTC China is the largest one in the world. China itself accounts for more than half of the daily turnover in the Bitcoin digital currency.
The multinational online store eBay announced early in November that its online payments unit Paypal may add the Bitcoin to the present range of digital currencies it already accepts.
The biggest boost to Bitcoin’s credibility came, however, from an unlikely source: the Federal Reserve Bank of Chicago. It just published its “Bitcoin Primer,” in which senior economist Francois Velde explained that money is a medium of exchange: “something that is accepted in exchange for a valuable good or service, not for itself but to be exchanged later for another good or service.” He added:
Once he learned what they were, and found a digital “wallet” — Coinbase — to help him manage the transactions, he saw the marketing advantage: “We expect people to come to us especially because they can use Bitcoin.” Klee isn't taking much of a risk as more than 14,000 merchants already use Coinbase, which has opened up nearly half a million Bitcoin wallets for its customers. Said Klee: “If you have a lot of people accepting it, it becomes a useful and legitimate form of payment.”
That’s the ruling that Federal Judge Amos Mazzant made back in August when he said that “Bitcoin can be used as money. It can be used to purchase goods or services … it can also be exchanged for conventional currencies such as the U.S. dollar, Euro, Yen and Yuan.”
The Bitcoin gained some more credibility when the Senate Homeland Security and Governmental Affairs Committee invited six federal agencies to testify about it, along with numerous other interested parties. One of those “interested parties” was Federal Reserve Chairman Ben Bernanke, who sent the committee a letter expressing his view that such currencies as the Bitcoin “may hold long-term promise.” On that day the market value of the Bitcoin jumped $40 to $785. As of Tuesday, November 26, a Bitcoin was worth $840.
This was followed in short order by an article in the New York Times that asked rhetorically if the Bitcoin was just a passing fad, or if it had legs. The author found a skeptic who said that “In a matter of months you won’t be hearing about it. It will go the same way of Paris Hilton.”
Not if China has anything to say about it. On October 15 Baidu Jiasule, a firewall service for websites in China, announced that it would begin accepting Bitcoins for its services. This didn't happen in a vacuum, as Gordon Chang pointed out in Forbes magazine:
It is inconceivable that Baidu would permit the acceptance of Bitcoins without first clearing the matter with Beijing authorities.
At present there are almost 20 trading platforms handling Bitcoin transactions in China, and BTC China is the largest one in the world. China itself accounts for more than half of the daily turnover in the Bitcoin digital currency.
The multinational online store eBay announced early in November that its online payments unit Paypal may add the Bitcoin to the present range of digital currencies it already accepts.
The biggest boost to Bitcoin’s credibility came, however, from an unlikely source: the Federal Reserve Bank of Chicago. It just published its “Bitcoin Primer,” in which senior economist Francois Velde explained that money is a medium of exchange: “something that is accepted in exchange for a valuable good or service, not for itself but to be exchanged later for another good or service.” He added:
Bitcoin Is Flawed, But It Will Still Take Over the World
The Pink Cow is the first restaurant in Tokyo that lets you pay with Bitcoin, the world’s most popular digital currency. In some ways, this California-Mexican cafe — a hangout run by an American expatriate who believes in new ideas — sits at the center of the Bitcoin universe. The digital currency was created by an anonymous computer programmer who many assume is Japanese, and the first big Bitcoin exchange — the web service where so many people bought their first bitcoins — is operated out of a Tokyo office not far from this wonderfully quirky bar and restaurant in the city’s Roppongi district.
But when the Tokyo Bitcoin Meetup Group holds one of its weekly gatherings at the Pink Cow — bringing together Bitcoin enthusiasts from across the city and beyond — only about a third of them actually pay for dinner and drinks with bitcoins. People like Marco Crispini, an expatriate from Britain, and Aya Walraven, who moved to Tokyo from Canada, very much believe in the digital currency. And they own bitcoins. But they prefer not to spend them because their value just keeps going up.
You can see their point. In the month since Crispini and Walraven declined to spend their bitcoins on burritos at a mid-October meetup, the value of the currency rose from about $160 on the Tokyo-based Mt. Gox exchange to well above $700. In other words: What they would have spent on a $20 Cal-Mex meal is now worth at least $90.
The trouble is that this sort of bitcoin hoarding leaves many questioning the future of the currency. If economic incentives encourage people to hoard their bitcoins rather than spend them, the thinking goes, the currency will never fulfill the extravagant promises laid down by the biggest believers, who say it will streamline monetary transactions, free the world from the financial manipulation of big government and big banks, breakdown the financial walls between nations, and, well, remake the worldwide economy.
The concerns are justified. Even some of Bitcoin’s most ardent supporters — like Fred Friis, one of the Tokyo Bitcoiners who regularly spends his digital currency at the Pink Cow — say that the consistent increase in the currency’s value is a “legitimate issue.”
But when the Tokyo Bitcoin Meetup Group holds one of its weekly gatherings at the Pink Cow — bringing together Bitcoin enthusiasts from across the city and beyond — only about a third of them actually pay for dinner and drinks with bitcoins. People like Marco Crispini, an expatriate from Britain, and Aya Walraven, who moved to Tokyo from Canada, very much believe in the digital currency. And they own bitcoins. But they prefer not to spend them because their value just keeps going up.
You can see their point. In the month since Crispini and Walraven declined to spend their bitcoins on burritos at a mid-October meetup, the value of the currency rose from about $160 on the Tokyo-based Mt. Gox exchange to well above $700. In other words: What they would have spent on a $20 Cal-Mex meal is now worth at least $90.
The trouble is that this sort of bitcoin hoarding leaves many questioning the future of the currency. If economic incentives encourage people to hoard their bitcoins rather than spend them, the thinking goes, the currency will never fulfill the extravagant promises laid down by the biggest believers, who say it will streamline monetary transactions, free the world from the financial manipulation of big government and big banks, breakdown the financial walls between nations, and, well, remake the worldwide economy.
The concerns are justified. Even some of Bitcoin’s most ardent supporters — like Fred Friis, one of the Tokyo Bitcoiners who regularly spends his digital currency at the Pink Cow — say that the consistent increase in the currency’s value is a “legitimate issue.”
Unsentimental bitcoin doesn’t take a holiday, blasts past $1,100
It seems only yesterday — it was only yesterday — that bitcoin went soaring past $1,000, popping eyeballs everywhere. But as most of America gears up to tuck into some turkey on Thursday, profit-takers seemed nowhere to be seen, as the virtual currency sailed past that big level to tap a new high of $1,170 over at Mt. Gox, last changing hands at $1,143.90 (albeit in low volumes).
Great for the Winklevoss twins, bad news for people like James Howell, a Brit who tossed a hard drive that held $7.5 million worth of bitcoins, based on the latest levels over $1,000. Poor Howell, his hard drive is now buried somewhere in a landfill that’s as big as a soccer field and four or five feet deep.
And with the rising value of the currency, bitcoin theft stories are going to get even more common. Two days ago, a Denmark-based exchange says it had more than $1 million worth of bitcoins taken in a robbery that lasted a few days. The victim, Bitcoin Internet Payment Services — believed to be the biggest exchange in Europe — was hit by two huge denial-of-service attacks. The Danish provider was swamped by traffic that overloaded its site, “despite several layers of protection”, it said.
Unsentimental bitcoin won’t be missing out on the busiest shopping week of the year either, holding its own event — a Bitcoin Black Friday involving hundreds of merchants. One of those, Gyft, lets people use bitcoins to buy gift cards with big retailers such as Target TGT , Sears SHLD , Gap GPS , Toys R Us and more.
The speed at which bitcoin has been galloping away inspired ZeroBlock — a bitcoin digital news, information and data aggregator — to recently push out its app to Android phones, adding to its existing Apple version. But some remain convinced that the virtual currency is doomed. Edward Hadas, economics editor of Reuters Breakingviews, said in a blog Wednesday that bitcoin developers are trying to prove that money can be successfully privatized, but says history shows money not issued by governments is always doomed.
“Bitcoin exemplifies some of the problems of private money: Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith,” Hadas says.
“Besides, if bitcoin ever really started to take off, governments would either ban it or take over the system,” partly due to worries about the stability of a shadow monetary system or due to self-preservation worries, he notes.
Bitcoin, Hadas says, is appealing because “governments are not fully living up to the responsibility that comes with state-sponsored money. Bitcoin, or something like it, will thrive until the authorities do better.”
Great for the Winklevoss twins, bad news for people like James Howell, a Brit who tossed a hard drive that held $7.5 million worth of bitcoins, based on the latest levels over $1,000. Poor Howell, his hard drive is now buried somewhere in a landfill that’s as big as a soccer field and four or five feet deep.
And with the rising value of the currency, bitcoin theft stories are going to get even more common. Two days ago, a Denmark-based exchange says it had more than $1 million worth of bitcoins taken in a robbery that lasted a few days. The victim, Bitcoin Internet Payment Services — believed to be the biggest exchange in Europe — was hit by two huge denial-of-service attacks. The Danish provider was swamped by traffic that overloaded its site, “despite several layers of protection”, it said.
Unsentimental bitcoin won’t be missing out on the busiest shopping week of the year either, holding its own event — a Bitcoin Black Friday involving hundreds of merchants. One of those, Gyft, lets people use bitcoins to buy gift cards with big retailers such as Target TGT , Sears SHLD , Gap GPS , Toys R Us and more.
The speed at which bitcoin has been galloping away inspired ZeroBlock — a bitcoin digital news, information and data aggregator — to recently push out its app to Android phones, adding to its existing Apple version. But some remain convinced that the virtual currency is doomed. Edward Hadas, economics editor of Reuters Breakingviews, said in a blog Wednesday that bitcoin developers are trying to prove that money can be successfully privatized, but says history shows money not issued by governments is always doomed.
“Bitcoin exemplifies some of the problems of private money: Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith,” Hadas says.
“Besides, if bitcoin ever really started to take off, governments would either ban it or take over the system,” partly due to worries about the stability of a shadow monetary system or due to self-preservation worries, he notes.
Bitcoin, Hadas says, is appealing because “governments are not fully living up to the responsibility that comes with state-sponsored money. Bitcoin, or something like it, will thrive until the authorities do better.”
Carter: Bitcoins need to be better than real money in order to survive
It has been a rough couple of months for bitcoins.
In October, the U.S. government shut down the Silk Road website, where bitcoins were being used to purchase illegal drugs. Then in early November a researcher at Cornell University published a paper asserting that the virtual currency is broken -- that is, that the system of difficult algorithms that one must solve to obtain bitcoins might be successfully exploited by a group of sufficiently clever and selfish bitcoin miners.
Next came the U.S. Senate hearings aimed at discovering whether these so-called crypto-currencies are a tool for drug dealers and money launderers to do business beyond official scrutiny. And now, just in time for the holiday shopping season, comes the disclosure that the Bitcoin Internet Payment System -- or BIPS -- has been hacked. Customers lost the equivalent of about $1 million in bitcoins.
CARTOONS: Jimmy Margulies' cartoons | Cartoon Roundup
Hacking BIPS isn't like stealing from a virtual bank run by an Australian teenager. According to its website, BIPS is "the premier bitcoin service provider," helping to facilitate bitcoin use even in the brick-and-mortar world.
Bitcoins are mined by solving algorithms that were posted on the Internet five years ago by a programmer or group of programmers using the pseudonym Satoshi Nakamoto. Successful miners earn a certain number of bitcoins. The rate of bitcoin distribution automatically slows over time, so that the currency cannot be inflated. In fact, the total number of bitcoins is capped at 21 million.
Bitcoins may or may not be money -- economists differ on whether they are in sufficiently widespread use to constitute a medium of exchange -- but they are plainly a valuable asset. Like other assets, they will have value as long as people want them.
And right now, bitcoins are hot. Very hot. The bitcoin market has shrugged off this bad news, recently hitting a high of more than $1,000 -- a considerable feat given that less than a year ago, a single bitcoin was worth about $13. One of the reasons digital thieves risk breaking into virtual vaults is that the value of bitcoins keeps rising.
Certainly bitcoins have captured the imagination of the news media. Consider the excitement over the first bitcoin ATM, installed in a Vancouver coffee shop, or the front-page Wall Street Journal story about a couple who traveled the world using only bitcoins.
At the same time, there have been lurid stories about how easily drug dealers and money launderers can manipulate the anonymity of the bitcoin for their own purposes. Yet the U.S. government's takedown of Silk Road suggests that hiding in the bitcoin system isn't as easy as it looks. "It is not in fact anonymous," says Assistant Attorney General Mythili Raman. "It is not immune from investigation."
If bitcoins are to have a future, the selling point can't be anonymity -- a characteristic sure to draw increasing government scrutiny. The selling points will have to be security and convenience.
The concepts are not unrelated. A principal knock on bitcoins has been the claim that they are inherently insecure. The principal defense has been that they are as secure as "real" currency. Both can be lost or stolen. And, as bitcoin supporters like to point out, most of the cases of hacking involve individuals who have followed poor password security procedures -- the sort of carelessness that would cause you equal trouble with your dollar-denominated online banking account.
The trouble for the crypto-currencies is that being as safe as other forms of currency isn't enough. Precisely because bitcoins are new and feel peculiar to a world raised on the notion that governments control the supply of money, bitcoins will probably enter widespread use only when their advocates can credibly argue that the virtual currency has advantages other than anonymity over the real thing.
As people come to believe that bitcoins are secure, they will be more willing to use them, and the demand will stimulate a supply of sellers of goods and services who will accept them. Once acceptance becomes sufficiently widespread, the debate over whether bitcoins are money will be over.
Maybe the crypto-currencies are a fad or a bubble. Maybe governments and financial institutions, furious about the competition, will take steps to destroy them.
In October, the U.S. government shut down the Silk Road website, where bitcoins were being used to purchase illegal drugs. Then in early November a researcher at Cornell University published a paper asserting that the virtual currency is broken -- that is, that the system of difficult algorithms that one must solve to obtain bitcoins might be successfully exploited by a group of sufficiently clever and selfish bitcoin miners.
Next came the U.S. Senate hearings aimed at discovering whether these so-called crypto-currencies are a tool for drug dealers and money launderers to do business beyond official scrutiny. And now, just in time for the holiday shopping season, comes the disclosure that the Bitcoin Internet Payment System -- or BIPS -- has been hacked. Customers lost the equivalent of about $1 million in bitcoins.
CARTOONS: Jimmy Margulies' cartoons | Cartoon Roundup
Hacking BIPS isn't like stealing from a virtual bank run by an Australian teenager. According to its website, BIPS is "the premier bitcoin service provider," helping to facilitate bitcoin use even in the brick-and-mortar world.
Bitcoins are mined by solving algorithms that were posted on the Internet five years ago by a programmer or group of programmers using the pseudonym Satoshi Nakamoto. Successful miners earn a certain number of bitcoins. The rate of bitcoin distribution automatically slows over time, so that the currency cannot be inflated. In fact, the total number of bitcoins is capped at 21 million.
Bitcoins may or may not be money -- economists differ on whether they are in sufficiently widespread use to constitute a medium of exchange -- but they are plainly a valuable asset. Like other assets, they will have value as long as people want them.
And right now, bitcoins are hot. Very hot. The bitcoin market has shrugged off this bad news, recently hitting a high of more than $1,000 -- a considerable feat given that less than a year ago, a single bitcoin was worth about $13. One of the reasons digital thieves risk breaking into virtual vaults is that the value of bitcoins keeps rising.
Certainly bitcoins have captured the imagination of the news media. Consider the excitement over the first bitcoin ATM, installed in a Vancouver coffee shop, or the front-page Wall Street Journal story about a couple who traveled the world using only bitcoins.
At the same time, there have been lurid stories about how easily drug dealers and money launderers can manipulate the anonymity of the bitcoin for their own purposes. Yet the U.S. government's takedown of Silk Road suggests that hiding in the bitcoin system isn't as easy as it looks. "It is not in fact anonymous," says Assistant Attorney General Mythili Raman. "It is not immune from investigation."
If bitcoins are to have a future, the selling point can't be anonymity -- a characteristic sure to draw increasing government scrutiny. The selling points will have to be security and convenience.
The concepts are not unrelated. A principal knock on bitcoins has been the claim that they are inherently insecure. The principal defense has been that they are as secure as "real" currency. Both can be lost or stolen. And, as bitcoin supporters like to point out, most of the cases of hacking involve individuals who have followed poor password security procedures -- the sort of carelessness that would cause you equal trouble with your dollar-denominated online banking account.
The trouble for the crypto-currencies is that being as safe as other forms of currency isn't enough. Precisely because bitcoins are new and feel peculiar to a world raised on the notion that governments control the supply of money, bitcoins will probably enter widespread use only when their advocates can credibly argue that the virtual currency has advantages other than anonymity over the real thing.
As people come to believe that bitcoins are secure, they will be more willing to use them, and the demand will stimulate a supply of sellers of goods and services who will accept them. Once acceptance becomes sufficiently widespread, the debate over whether bitcoins are money will be over.
Maybe the crypto-currencies are a fad or a bubble. Maybe governments and financial institutions, furious about the competition, will take steps to destroy them.
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