Could Wikileaks scandal lead to new virtual currency?
- — 11 December, 2010 11:35
It's not an exaggeration to say that the recent Wikileaks scandal has shaken the Internet to its core. Regardless of where you stand on the debate, various services have simply refused to handle Wikileaks' business -- everything from domain-name providers to payment services -- and this has led to many questioning how robust the Internet actually is.
Hackers have already stated their aim to create their own DNS system, which will bypass officialdom. This uses peer-to-peer technology to get around the problem, a favorite of hackers because it's impossible to regulate.
But how about an entire currency based on peer-to-peer technology?
That's what's on offer from Bitcoin, a decentralized virtual currency that could either be the best idea since they figured out how to slice bread, or just another hacker's daydream. As the Wikileaks debacle continues, it's being increasingly discussed in various sections of the Web as a possible solution to the PayPal online payments monopoly.
Bitcoin is the creation of Japanese programmer Satoshi Nakamoto, and is a real, actual currency through which you can buy services and goods, right now. If you don't believe me, take a look at the Trade section of the Bitcoin website.
Newcomers can earn Bitcoins by downloading the Bitcoin client software and running computationally intensive tasks on their computer. In other words, the longer your computer is left running the Bitcoin client program, the more Bitcoins you'll incur. It runs in the background, and is polite to other software so you shouldn't realize it's there. According to the FAQ, the current rate of earning Bitcoins is about 50 every three weeks.
Bitcoins gain their value simply by the fact people are prepared to accept them as payment for services and goods. This sounds weak but this is not entirely dissimilar in nature to the major Fiat currencies such as the Dollar, Euro and Sterling. The only reason we're prepared to accept our wage in dollars is the fact that we know that shops and service providers across the United States (and other countries) are prepared to let us spend it.
You can amass additional Bitcoins just like you can earn real-life currency -- by offering services or goods and accepting Bitcoins as payment. Doing so will increase the integrity of the Bitcoin system -- something which, as a potentially Bitcoin wealthy person, it's in your interest to do.
Virtual currencies aren't a new idea, of course. Those with long memories will remember Beenz.com and Flooz.com, denizens of the dot.com boom that fell flat on their faces as the new century got underway. Additionally, some online games offer their own currency system that have virtual exchange rates for real money. However, Bitcoin differs because there's no central bank or other kind of controlling interest. It's entirely decentralized.
Bitcoins are transferred between individuals or businesses by specifying their Bitcoin address. Transactions travel through the peer-to-peer network created by those who are running the Bitcoin client software.
There's no single point of weakness. Nobody can stop the Bitcoin system or censor it, short of turning off the entire Internet. If Wikileaks had requested Bitcoins then they would have received their donations without a second thought.
Of course, you should make of that what you will. You might also want to ponder the fact that practically anybody in any country can send and receive Bitcoins in an entirely unpoliced way.
Should your business be looking to accept Bitcoins? That depends on how valuable you think they are, of course, and that's going to depend on what you can get for the Bitcoins you accumulate -- in terms of goods and services that can be bought for Bitcoins. The current Bitcoin-to-dollar exchange rate appears to be about 20 cents, and you can trade currencies courtesy of the various sites that let users both buy and sell Bitcoins.
However, purely as an intriguing idea that might indicate a possible future in an Internet heavily regulated by government, Bitcoins are worth taking a look at.