DailyTech - Bitcoin Rollercoaster Ride Sees Currency Soaring to New High of $32/Coin

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Internet Bitcoin Rollercoaster Ride Sees Currency Soaring to New High of $32/Coin
Jason Mick (Blog) - February 28, 2013 3:39 PM

37 comment(s) - last by theapparition.. on Mar 4 at 9:44 AM

Bitcoins are accepted by a growing number of merchants, even used to pay some employees

Bitcoin Magazine this week heralded some exciting news. The popular cryptocurrency that's free of regulation by any nation state has hit a new high of $32 USD/Bitcoin on Mt. Gox, the world's largest exchange. The previous high had been $31.9099 on June 8, 2011.

Right after hitting that previous high, Bitcoin values began a freefall, which we covered in our piece "Digital Black Friday: First Bitcoin "Depression" Hits". It was unclear whether the plunge was due merely to profit taking or other issues. Shortly thereafter, the currency was further devalued when MtGox was hit with a database dump attack and users accounts were compromised due to the service's weak MD5 hashing of passwords. It took the site months to rebuild trust, beef up security, and unwind the trail of fraudulent transfers.

The Bitcoin rollercoaster ride bottomed out at $2 USD/coin in November 2011. And last fall BitFloor -- another major exchange -- was hacked, and $250,000 USD worth of Bitcoins were stolen. But despite that, the currency continued to creep upwards.

_{Bitcoins values have soared in the last six months. [Chart]}

Inflation remains a serious concern for Bitcoins, as do scammers using classic techniques like Ponzi schemes. And there's the issue of Bitcoin-mining malware that's afflicted PC and Mac users alike. However, the currency's utility as an (relatively) untraceable and easy to use digital currency is keeping it sailing high.

Popular social media site Reddit recently gave Bitcoins a boost, by accepting the cryptocurrency as a means of paying for "Gold" premium memberships. LaCie Group SA's (EPA:LAC) "Wuala" and Kim Dotcom's new "Mega" file sharing services both accept Bitcoins as a means of payment.

_{Mt. Gox remains the most popular place to buy and sell Bitcoins.}

Domain registrar Namecheap is also considering BitCoin. And WordPress.com is currently accepting BitCoin payments for various services.

Source: BitCoin Magazine

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RE: Not for me

By Mint on 2/28/2013 8:39:34 PM , Rating: 2

quote:
In our current system, debt-based money can only be paid off with more debt, leading to an eventual collapse.

You're forgetting debt default and debt erosion through inflation.

Interest rates exceeded inflation for almost the entire period before the recession. That means just as much debt - private and public - would have been created under a gold standard.

quote:
I'll take gold over fiat debt-based money any day of the week.

That's because you don't understand the ramifications.

If we switched to a gold back dollar today, whatever the astronomical value of gold would be to do that, the debt that the wealthy hold would be given a free 1-2% boost in real interest due to lack of inflation. There's ~$50T in public+private debt in the US, so that's a free $500B+ per year going to the wealthy for doing nothing.

That doesn't even take into account the hoarding that Solandri was talking about, which would make the wealth gap skyrocket even more. But does the productive value of gold go up? Of course not. So you're back to a virtual fiat currency anyway, only it's controlled by the wealthy, who profit massively from deflation.

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