Switch to Desktop Site
 
 

Alternative currencies like bitcoin are a mirror of their users

The e-currency bitcoin spiked and then fell last week, sowing doubts about alternative currencies, whether on the Internet or in local communities. Such experiments need a firm basis of trust.

Image

This photo shows bitcoin tokens at software engineer Mike Caldwell's shop in Sandy, Utah. Mr. Caldwell mints physical versions of bitcoins, cranking out homemade tokens with codes protected by tamper-proof holographic seals, a retro-futuristic kind of prepaid cash. With up to 70,000 transactions each day over the past month, bitcoins have been propelled from the world of Internet oddities to the cusp of mainstream use, a remarkable breakthrough for a currency that made its online debut only four years ago.

AP

About these ads

A big financial story last week was the sudden rise and fall of a new “digital currency” called bitcoin. Designed by computer experts as a form of secure electronic cash backed only by its community of users, bitcoin’s value went from less than $100 to $266 and then back again.

Bitcoin’s bubble-and-burst was not a sign of faith in the future of “cryptocurrencies,” or money systems that assume encrypting software can outsmart a cheating human in e-commerce.

Still, bitcoin, which is the world’s first online decentralized currency, has already spawned better versions of itself (“litecoin” and “PPCoin”). As with other “unofficial” methods of payment, they represent a desire for alternative monetary systems that can be trusted – as well as build trust.

Faith in the global financial system has remained weak since the 2008-09 crisis, especially as central banks from Tokyo to Washington print more money to pump up their economies. Rather than rely on the dollar, the yen, or the euro, many communities – either “virtual” ones on the Internet or real ones on Main Street – are trying alternative currencies.

Next

Page:   1   |   2   |   3

Share