Bitcoin, or the Headline of all my Techie RSS Feeds
Wow, more and more news about the controversial Bitcoin currency has been circulating at the speed of light in the past few weeks. I'd love to say that I was a part of the mining process way back when, but sadly I thought it would be one of those fads that would fade quickly (not saying it won't in the near future, however). The bitcoin itself is a complicated topic, and I certainly don't have the technical knowledge to explain everything here, but it is essentially a digital, decentralized currency (consult Wikipedia for a much more in-depth look).
Just last week, the total value of Bitcoins hit $1B, and the currency is fast becoming the subject of controversy. One such issue is the argument that Bitcoins are essentially unregulated, which could cause a variety of problems (money laundering, black market value, security threats). In fact, just a few weeks ago US regulators decided to enact laws that would classify Bitcoin transactions as Money Service Businesses, forcing a subset of Bitcoin users to adhere to the laws of those businesses. Certainly, once the government steps in to start regulating anything, you know that thing has become a big deal.
For anyone keeping up with current events, the economic situation of Cyprus last week was a pretty important issue, with an enormous 10B Euro bailout offered in exchange for many harsh criteria. A large number of people have argued that the Cypriot financial crisis caused the ridiculous surge in Bitcoin value in the past month. Here are some illustrations:
Correlation-Causation fallacy aside, I find it hard to believe that the crisis directly affected the spark in Bitcoin prices. Ars has a more detailed article explaining why. One of the major reasons in the tripling of Bitcoin value in the past month is due to the appearance of Bitcoin gambling services, which can easily drive up the market value of the currency. An outage at a Bitcoin exchange due to DDOS today caused the currency to dip over $30 in value. While I agree that Bitcoin is an innovative (and possibly revolutionary) technology, I feel that the sheer volatility of the currency still leaves much to be desired, and this weakness may not be something that can be fundamentally corrected. That said, I also feel a tinge of envy towards those who invested in the currency in its infancy and are reaping unimaginable profits.
Sources:
Ars Technica [Bitcoin value triples in a month...]: (http://arstechnica.com/business/2013/04/bitcoin-value-triples-in-a-month-to-all-time-high-of-more-than-100/)
Ars Technica [Bitcoin-based casino rakes in more than $500,000...]: (http://arstechnica.com/business/2013/01/bitcoin-based-casino-rakes-in-over-500000-profit-in-six-months/)
Ars Technica [Experts pour cold water on claim...]: (http://arstechnica.com/business/2013/03/experts-pour-cold-water-on-claim-that-cyprus-crisis-caused-bitcoin-boom/)
Ars Technica [US Regulator: Bitcoin exchanges must comply...]: (http://arstechnica.com/tech-policy/2013/03/us-regulator-bitcoin-exchanges-must-comply-with-money-laundering-laws/)
The Market Monetariast [The Cyprus 'deposit grab' sparks a rally in Bitcoins]: (http://marketmonetarist.com/2013/03/21/the-cyprus-deposit-grab-sparks-a-rally-in-bitcoins/)
CNET [Bitcoin hits record exchange values...]: (http://news.cnet.com/8301-1023_3-57576928-93/bitcoin-hits-record-exchange-values-with-cyprus-banking-crisis/)
CNET [Surging Bitcoin plunges $30...]: (http://news.cnet.com/8301-1023_3-57577853-93/surging-bitcoin-plunges-$30-after-exchange-outage-hack/)
IEEE Spectrum [US Treasury to Bitcoin...]: (http://spectrum.ieee.org/tech-talk/computing/networks/us-treasury-to-bitcoin-we-are-watching)
IEEE Spectrum [Bitcoin hits 1 billion]: (http://spectrum.ieee.org/computing/networks/bitcoin-hits-1billion)














