Cross-posted by Charleston Voice, 06.12.12
More Bitcoin posts at bottom of article
Last Updated: Jun 12, 2012 8:02 AM ET
Akos Stiller/Bloomberg
The bad news out of Europe is
benefitting safe haven countries, pushing down borrowing costs for a
whole swath of governments. On May 30 the yield on the benchmark 10-year
U.S. Treasury slipped to 1.6%, the lowest since the Second World War.
Fearful of the future, Europeans are moving their money out of
their banks and dumping it into safe havens such as U.S. Treasuries,
Government of Canada bonds — and apparently the virtual currency
Bitcoin.
According to Mr. Shrem, the sudden rise has been driven by people in countries like Greece, Italy, Spain — and even the Netherlands — anxious to protect their savings.
“We’re getting requests from people literally saying, can we mail you euros? We can’t do that legally, but they keep asking.”
The bad news out of Europe is benefitting safe haven countries,
pushing down borrowing costs for a whole swath of governments. On May 30
the yield on the benchmark 10-year U.S. Treasury slipped to 1.6%, the
lowest since the Second World War. Ten-year bond yields in Germany,
France and Canada have all hit record lows in recent weeks. Even the
U.K. is getting a lift.
But why is Bitcoin caught up in the frenzy?
The darling of techies, hipsters and, increasingly, currency traders, it was created back in 2009 as an Internet-only currency regulated by a network algorithm. Traditional currencies, the thinking went, are cumbersome and expensive to use in online transactions.
Every time a purchase is made, fees must be paid to a bank or credit card company. Costs are even more onerous when one currency is converted to another.
Bitcoin solved these problems and others as well, since it operates outside the payment systems operated by the banks. More importantly, it’s not under the control of any central bank or government. In fact, the supply of Bitcoins is controlled by an algorithm.
Proponents argue that makes it safer than traditional fiat currencies and essentially immune to the political pressures.
Indeed, at a time when governments around the world are pumping massive amounts of so-called fiscal stimulus into the economy, potentially setting the stage for untold inflation down the road, it’s not surprising that Bitcoin is suddenly attracting a lot of attention, as are other digital currencies.
For fans of the currency, it’s hard to imagine a better way to shelter your savings from the ravages of the gales that are blowing through global financial markets.
But it’s not the only alternative currency that’s garnering attention.
Second Life, a popular online game, has its own cyber money, known as linden dollars. Originally intended for use only within the game, linden dollars have morphed into a real currency that is becoming widely used across the internet by real consumers.
Earlier this year the Canadian Mint announced a project to create its own digital money, MintChip. Analysts call it a positive sign, since it shows that even the government has recognized the importance of digital currency.
So far though, the concept mostly remains a work in progress. Almost since its creation, Bitcoin has been struggling with hurdles, including software bugs and, more worryingly, hacker attacks. Last June, Mount Gox, one of the biggest Bitcoin exchanges, suffered a security breach with hackers reportedly making off with thousands of account passwords and a substantial amount of Bitcoin money, inflicting a huge blow to user confidence.
Since then the value has recovered somewhat — it was trading around US$4 in April. But amid renewed fears around the eurozone it’s been on a steady upward trajectory, climbing from around $5.20 at the start of June to an intraday high of $5.65 on Friday. Source @Financial Post
‘We’re getting requests from people saying, can we mail you euros? We can’t do that legally, but they keep asking’
“European volume has been skyrocketing,” said Charlie Shrem, chief
executive of BitInstant LLC, a company in New York that enables clients
to transfer funds between Bitcoin and U.S. and Canadian dollars, British
pounds, euros and other major currencies.According to Mr. Shrem, the sudden rise has been driven by people in countries like Greece, Italy, Spain — and even the Netherlands — anxious to protect their savings.
“We’re getting requests from people literally saying, can we mail you euros? We can’t do that legally, but they keep asking.”
But why is Bitcoin caught up in the frenzy?
The darling of techies, hipsters and, increasingly, currency traders, it was created back in 2009 as an Internet-only currency regulated by a network algorithm. Traditional currencies, the thinking went, are cumbersome and expensive to use in online transactions.
Every time a purchase is made, fees must be paid to a bank or credit card company. Costs are even more onerous when one currency is converted to another.
Bitcoin solved these problems and others as well, since it operates outside the payment systems operated by the banks. More importantly, it’s not under the control of any central bank or government. In fact, the supply of Bitcoins is controlled by an algorithm.
Proponents argue that makes it safer than traditional fiat currencies and essentially immune to the political pressures.
Indeed, at a time when governments around the world are pumping massive amounts of so-called fiscal stimulus into the economy, potentially setting the stage for untold inflation down the road, it’s not surprising that Bitcoin is suddenly attracting a lot of attention, as are other digital currencies.
For fans of the currency, it’s hard to imagine a better way to shelter your savings from the ravages of the gales that are blowing through global financial markets.
But it’s not the only alternative currency that’s garnering attention.
Second Life, a popular online game, has its own cyber money, known as linden dollars. Originally intended for use only within the game, linden dollars have morphed into a real currency that is becoming widely used across the internet by real consumers.
Earlier this year the Canadian Mint announced a project to create its own digital money, MintChip. Analysts call it a positive sign, since it shows that even the government has recognized the importance of digital currency.
So far though, the concept mostly remains a work in progress. Almost since its creation, Bitcoin has been struggling with hurdles, including software bugs and, more worryingly, hacker attacks. Last June, Mount Gox, one of the biggest Bitcoin exchanges, suffered a security breach with hackers reportedly making off with thousands of account passwords and a substantial amount of Bitcoin money, inflicting a huge blow to user confidence.
Since then the value has recovered somewhat — it was trading around US$4 in April. But amid renewed fears around the eurozone it’s been on a steady upward trajectory, climbing from around $5.20 at the start of June to an intraday high of $5.65 on Friday. Source @Financial Post
BITCOIN Posts:
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Apr 2, 2012 ... Bitcoin
is the world's first fully decentralized, peer-to-peer (p2p) virtual
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Aug 23, 2011 ... Expect bitcoin to be “banned” – expect the ban to be ignored.
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Mar 13, 2012 ... If they send payment from a Bitcoin address that has not been ... And,
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Sep 25, 2011 ... Bitcoin
& The End of State-Controlled Money · BRIC Nations decry
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