The Virtual Society --- big deal or big scam (part 2)

First there was Second Life. Second there is Bitcoin. I heard about it this morning on NPR:
http://www.npr.org/blogs/money/2011/08/24/138673630/what-is-bitcoin

What is Bitcoin? Here's what the Bitcoin website says about itself:

http://www.weusecoins.com/

Wikipedia has quite a long entry about Bitcoin.

In a world in which the dollar and the Euro look increasingly precarious, an alternative method of exchange seems almost inevitable. Blackmarkets and underground economies have always existed. And in the 21st century, an Internet-based version seems equally inevitable. Money itself is a sort of fanciful notion, if you stop to think about it. You give me a piece of green-brown paper and I give you food, clothing, shelter, legal advice... almost anything you want.

And gold... currently trading at over $1800 an once. As Midas learned thousands of years ago, you can't eat... it's not a good material for comfy, warm clothing... its medicinal uses are few... and you can only wear so much jewelry. Notwithstanding that the late, not-so-great dictator of Libya had gold-plated guns in his palace, it's still only valuable because humans generally agree that it is.

So why not Bitcoins? Here are Wikipedia's criticisms:

1. Unfair initial distribution (well, the same can usually be said of stocks in an IPO)

2. Technical complexity (yeh, that was pretty apparent in the NPR segment)

3. Fluctuation (as if the tock markets don't)

4. Malware and theft (the NPR piece ends with news of a virtual bank robbery occurring on Bitcoins site... virtual robbery, but real loss for some)

5. Criminal uses (duh... who wants anonymous banking, ala Swiss bank accounts? Answer: former Nazis, current dictators looting their nation's treasuries, drug lords, Mafia)

6. Covert mining (FOr this one, I gotta quote Wikipedia: "In June 2011, Symantec warned about the possibility of botnets engaging in covert "mining" of bitcoins (unauthorized use of computer resources to mount brute force attacks against bitcoins).[72][73], consuming computing cycles, using extra electricity and possibly increasing the temperature of the computer. Later that month, an employee of the Australian Broadcasting Corporation was caught after using the company's servers to generate bitcoins without permission.[74] Bitcoin mining can be sped up considerably by using the parallel processing capabilities of the GPUs built into many modern-day video cards.")

7. There's also a cross reference to crypto-anarchism. I have to get to work, so I'll leave it to you to get up to speed on this one.

Meanwhile, Second Life abides, like the dude in "The Big Labowski."

As my earlier post this morning suggests, four or five years ago, I thought this was a lot of nonsense. Four years later --- older if hardly any wiser --- and with my meager pension funds buffeted by the slings and arrows of outrageous fortune, a second life, funded by bitcoins, begins to have its appeal for me. There I'll be: forever 35, handsome, healthy, pockets bulging with bitcoins...

http://vodpod.com/watch/480038-bob-dylan-forever-youngfrom-the-last-waltz
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