Bitcoin, the virtual digital currency which uses a public electronic ledger system to log every transaction and an advanced “mining” system which keeps a finite number of bitcoins available, thereby increasing their value, is again on fire.
The value of this electronic commodity is highly speculative as its use as an actual currency is limited to mostly shady back room deals on the anonymous “dark Net”. For years now its reputation as a preferred medium for drug dealers and extortionists kept big governments, banks and marketplaces away from it. None of the big online retailers, from eBay to Alibaba, will accept it, and you don’t see it in the bricks-and-mortar retail scene either.
The virtual currency has real drawbacks beyond just its reputation. Bitcoin’s advanced ledger system has proven impenetrable to hackers. The bitcoin hacks you hear about in the news are instances of thefts of poorly secured bitcoins. The underlying technology of the bitcoin blockchain has been impossible to corrupt – no one has ever been able to counterfeit bitcoins. Here lies one of blockchain’s shortcomings: “instantly” confirming every transaction through the blockchain – which keeps the system error-free, can take up to 20 minutes to complete, and at least 10 minutes. Forget about using bitcoins to quickly pay for that carton of juice at the FamilyMart like Bangkokians do with their rabbit tap-cards. Another problem is that these encrypted strings of random letters and numbers that represent bitcoins and bitcoin transactions can be cumbersome, especially to non-techies. Although wallet apps promise to make the experience more user-friendly, simple errors are irreversible. There is only the blockchain, no customer service reps.
Despite its shortcomings, bitcoin has continued to surge as excitement about the potential of the new technology has not abated. With bitcoin rising, a number of digital coin imitators are swimming in its wake. Since the blockchain technology is open-source, anyone who possesses advanced coding skills can make their own crypto-currency. Some of these promise to address some of bitcoin’s issues. LiteCoin, for example, reduces the transaction confirmation time to as little as two and half minutes. Etherium boasts that not only can it be used as a currency, its blockchain network can become a “world computer” that hosts third-party apps and takes power away from corporate giants like Google and Apple. Others make the mining game more random, so not only supercomputers can play. Web exchange services like Kraken and BitStamp act as trading platforms for all the various public coins that are now floating around the Internet. Their interface looks and feels similar to a stock-trading platform with users day-trading the various coins against each other.
The corporate money movers that were initially so wary of blockchain now feel that perhaps a little bureaucracy is exactly what this technology needs. Ripple coin is being backed by some of the world’s largest financial behemoths, such as Standard Chartered, American Express and
UBS. They are hoping that corporate backing and customer service brings some of the retailers around. The Russian government recently announced that Russia will introduce its own crypto-currency with itself acting as the miner and the coins exchangeable with rubles only. Speaking of governments, financial bureaux and governments all over the world have repeatedly ruled or decided that these crypto-currencies are actually not currencies at all, but rather commodities like gold or silver. With that in mind the latest entry into the virtual coin world is Ankorus. Ankorus is launching as another exchange service but it will allow the user to “tokenise” standard equities, bonds and commodities into the exchange and thus allow for everything to be traded on a single exchange and will introduce its
own crypto-currency at the same time.
With all these developments in technology the future is uncertain. They could all come crashing down in value like a typical bubble, or perhaps the speculators will decide that there is some wisdom in the establishment taking over. In that case those new players will gain at the expense of such crypto-currencies as bitcoin.
For now, they all seem to be rising in unison.