For the first time ever, the digital crypto currency Bitcoin is worth more than gold. Or, in other words, one single bitcoin has a higher value than an ounce of gold.
BBC were probably the first ones to report about it, but a lot of other publications are reporting about the price of bitcoins exceeding that of gold. And it is indeed an interesting news, since nobody owns Bitcoin and a Bitcoin is really nothing else than zeros and ones stored on several computers spreadout over the globe. In a sense, Bitcoin is money created from nothing and really doesn’t represent any other value than the combined computing time spent on so called mining.
You could argue that the same would count for any other currency since banks are no longer required to have money stored for all the money they manage. But that’s not entirely true since banks have in one way or another exchanged money for something else.
Which in itself is another kind of problem, but the fact the money is created from nothing else than CPU-processing is a phenomenon I’m not sure we can understand the full effects of. Clearly, bitcoins are used on the darker corners of the internet, where money laundering and ransoms for ransomware are just two of the topics that governments want to address.
The volatility of bitcoins is also worth discussing. While gold will retain it’s value (unless we start mining outside our planet or discover new vast amounts of gold on Earth, which is unlikely), bitcoins are subject to large variations.
Working with information security I know a lot about cyber attacks, and the vulnerabilities of modern society. Storing value in virtual currencies will surely give us very interesting opportunities, but can we trust the technology? Mining today will take some time, but what happens when quantum computers are used for mining – will that change the game plan?
There are a lot of interesting questions and challenges around bitcoins, and it will be really interesting to follow the development. And to make things even more interesting, there are several hundred other crypto currencies out there…
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