Utah Software Engineer Mints Physical Bitcoins

Over the last few years, much has been said about the emergence of the Bitcoin, which is said to be going up in value.

Bitcoin is a peer-to-peer payment system, which claims to operate with no central authority or banks.

According to the Bitcoin website, it is open-source; its design is public, nobody owns or controls it and everyone can take part.

In late 2011 one Bitcoin was worth $6 and now people pay about $650. This has led to the Bitcoin being hailed as the new wonder currency, that does not involve any of the evil banks and nasty governments.

But how true is this? And is the Bitcoin really as stable an investment as it appears to be?

Another question also arises: can we trust the Bitcoin?

Well for many of those who already have Bitcoins, it at first glance, seems to be a smart choice. Many major retailers across the world are starting to accept it and despite a couple of well-documented crashes, there is no denying that it seems to have recovered from its earlier troubles.

Or has it? Because it is also true to say that supply of the Bitcoin is much lower than demand and its rising value may not necessarily be a good thing after all.

What ends up happening is you get a situation where although those who are holding the Bitcoin are able to profit, those who are offering goods and services in exchange for it, lose out.

It also means that those who are holding onto Bitcoins are more reluctant to spend it – because in years to come, it could be worth even more.

This is hardly likely to foster stable, economic trade.
Recently, yet another major problem with Bitcoins was flagged up in the news.

A security leak at one of Bitcoin’s biggest exchanges has resulted in $375 million worth of Bitcoin going missing, raising fears about the future of the virtual currency.

As a result of the suspected hack, a decision was taken to close all transactions at Mt Gox – which has now gone bankrupt.

It follows the exchange halting cash withdrawals and its chief executive Mark Karpeles stepping down from the board of the Bitcoin foundation, which oversees the virtual currency.

And herein lies one of the most fundamental problems with the online currency. Because far from being a more stable and secure alternative to the banks, the world of Bitcoin is a world which is vulnerable to hacking and online security and data breaches.

Who is there to compensate Bitcoin holders if their money goes up in smoke, following a sophisticated attack online?

What regulation is in place to guard against such eventualities, and how reliable are these online Bitcoin exchanges anyway?

The answers so far, appear to be far from satisfactory.

A few weeks ago it transpired that JP Morgan filed a patent for a Bitcoin like architecture. Therefore the idea that banks would be unable to cash in on the virtual currency, is a false one.

Links to the NSA?

In 1996, the NSA wrote a paper called ‘ How to make a mint: The cryptography of anonymous electronic cash.

 The paper predicted a cryptographic electronic currency, very similar to Bitcoin.

Years after the paper, Bitcoin appeared on the scene. Coincidence? I suspect not.

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