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Another Big Week For Bitcoin

by Chris Poindexter

A Bit About BitcoinsIt’s been another up week for Bitcoin, although prices dropped from near $670 to $638 abruptly in midweek trading. Whenever prices moved over $670, big selling volume kicked in to swat prices back down to the $640 range.

The surge is likely due to Apple executives dropping a hint that Bitcoin would soon be an option on their system. Developers will be on the hook to make sure their acceptance of virtual currencies complies with all state and local laws. Apple’s announcement comes on the heels of Dish Network’s announcement that customers would soon be able to pay their bill with Bitcoin.

bitcoin_chartBruce Fenton conducted an interesting experiment, where he used Bitcoin to send 80 people money around the world. According to his account, it took him 15 minutes, cost less than a dollar, and the money was transferred with a 100% success rate. If there was any doubt about the value of Bitcoin’s system of frictionless exchange, then experiments like that should put them to rest. That doesn’t solve the other issues Bitcoin faces, but it was an impressive display all the same.

Even Wall Street is starting to pay attention to Bitcoin and take it more seriously. Companies like Goldman Sachs, Citibank, and Discover are all analyzing the potential impact of virtual currencies on our system of exchange. Even companies like PayPal, which may have viewed Bitcoin as a potential competitor, is considering the possibility of accepting Bitcoin for eBay payments. While many are looking at Bitcoin as a medium of exchange, the possibility remains that many of the advantages of Bitcoin could disappear as oversight is put in place.

Bitcoin is also threatened by the very financial organizations now analyzing cryptocurrency’s possibilities. By using their undue influence on the regulatory process, they could skew the Bitcoin regulatory landscape to their own advantage, co-opt the new technology, and erase its financial advantages. For proponents of Bitcoin, underestimating the combined legislative and regulatory impact of the combined financial services industry would not be wise.

 While many view Bitcoin as a medium of exchange, many of the advantages of Bitcoin could disappear as oversight is put in place.

Regardless of how they may influence the Bitcoin regulatory framework, it would be good to tread carefully when it comes to dealing with individual Bitcoin traders, as illustrated by Roger Ver. An ex-pat living in Japan, Ver was contacted by a hacker, who managed to hack his way into his Hotmail account and obtain his passport number, social security number, and other personal information. The hacker then demanded payment of 37 Bitcoins, roughly $23,000 at today’s prices, or he would exploit that information. The hacker, who went by various names, including Nitrous and Clerk1337, assured Ver the outcome would not be pleasant.

Instead of paying the ransom, Ver sent him a link to this Facebook post offering a bounty for information leading to the arrest of the hacker. Within minutes of posting this offer, the hacker handed over the new password to his hacked Hotmail account and hasn’t bothered him since.

Between overzealous regulators, Wall Street banks, and other less-sophisticated criminals, Bitcoin still has a long way to go but, so far at least, it’s met those challenges and still come out on top.

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