September 18, 2011 in Daily Bulletin
Bitcoins are a virtual currency which allow its users to bypass banks and other institutions, allowing them to trade with each other directly under the protection of complete anonymity. Its supporters tout it as the next global currency, but as Technology Review investigates, all is not well in the Bitcoin world. They report:
- Because of all the attention that Bitcoins have been getting, their value has skyrocketed, with a tenfold increase in five days in 2010. As a result of this people see bit coins as an investment more than as a token of exchange.
- The currency is volatile and is primarily traded by currency speculators. In a one year period it hit a low of a few pennies and a high of $33.
- There will never be more than 21 million Bitcoins in existence*
- All this means that people are hoarding the currency rather than trading it. The number of transactions conducted in Bitcoins has gone down, a negative development for the prospects of any currency aiming for world domination.
To read more about how Bitcoin needs to avoid being devoured by a circle of hype click here.
Source: Technology Review
Via: Jake Kennon
*Correction: An earlier version of this article incorrectly stated that there are 21 million Bitcoins in existence.