Bitcoin is on the money

Digital currencies are a threat to current financial systems, say Alec Ross and Jonathan Luff.


Around the world, governments everywhere are trying to come to terms with technology. Some are finding the pace of change too fast and the flow of information too free for their autocratic hierarchies, and they risk being swept away.

In the US and the UK, attempts to generate efficiencies and drive wider social benefits from digital technology have delivered uneven results. There is tension between the proponents of technology-driven change and those who seek to uphold long-established legal, economic and social structures, as witnessed in the arguments over intellectual property between the tech giants and the creative industries, and the heated debate over the surveillance of electronic communications. It is clear that policymakers and those who advise them do not have a satisfactory conceptual framework for dealing with the disruptive impact of technology on society.

At the G8 meeting in Northern Ireland last week, the focus was on three Ts: Trade, Tax and Transparency. The aim was to boost the global economy while responding to popular concern about the ways in which large corporations and wealthy individuals have used technology-driven globalisation to minimise taxes. This is an important agenda for taxpayers, and progress is being made.

Largely unnoticed, an interesting advert appeared in a handbook accompanying the G8, placed by a company that was until recently known only to a small number of technology entrepreneurs and early adopters. The advertiser was Mt Gox, a marketplace for trading BitCoin, a digital currency. The message was that with more than 7,500 legitimate businesses using a single BitCoin payment processor (BitPay), digital currencies have arrived, and existing currencies and regulators had better take note. And so they should, because the technology that powers digital currencies like BitCoin presents a challenge to those, such as the G8 governments, currently exercising sovereignty over our societies.

BitCoin itself is a peer-to-peer digital currency which, unlike the currencies found in virtual worlds such as Second Life’s “Linden Dollars”, can be used to purchase real-world as well as online goods and services. The people who created BitCoin remain something of a mystery, but its innovative peer-to-peer structure and the sophistication of its code has helped establish it as the leader in this field.

source: http://www.telegraph.co.uk/finance/currency/10139651/Why-Bitcoin-is-on-the-money.html

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