Bitcoin is a digital currency and peer-to-peer payment system introduced in 2009 by Satoshi Nakamoto. The use of Bitcoins allows an anonymous ownership and anonymous transaction of values. The digital currency can be sent and received using wallet software on a personal computer, on your phone or a web application. It can be sent to whomever with a Bitcoin-address. The most important aspect of the invented currency is the fact that it is impossible for any form of authority or government to manipulate the value of the currency by creating more of it and further create inflation. The Bitcoin is outside the system, and most importantly – the banks.
But what happens when a part of the system do fail? The Economist reports the disappearance of MT Gox and millions of dollars worth of Bitcoins. MT Gox (On the website you can see it is closed down: https://www.mtgox.com/) is one of many Bitcoin exchanges, but is reported to account for 70% of the currency’s global transactions. The Economist claims that large parts of the trading system are now compromised and that the value of the currency is under half of what it was – all do to the well-known software bug, which have not been dealt with. It is also claimed that many people who has invested in Bitcoins are screaming for help from financial regulators. Although the ‘crisis claim’ on Bitcoin by the economist, the Bitcoin Foundations wrote that the attack from the bug would not affect peoples’ Bitcoin wallets or funds – it only seems like the costumers of the Mt Gox should be worried.
The theory of the Bitcoin do offer a smart solution to those who don’t want to or are afraid be involved with unregulated capitalised banks – and worst of all, corrupted banks. This new invention has gained a lot of critique from the capitalised world – although some constructive. It obviously has a long way to go before more people believe its safe to invest, but could this concept be a winning solution for the people to the pressure of capitalism and globalisation? Are banks the problem? In theory I guess it could be a solution, but we all know theory does not always work in practice. What could be a third solution?
Schumpeter (2014) Mt gone. The Economist. Available at: http://www.economist.com/blogs/schumpeter/2014/02/bitcoin-s-woes