It is reported that an island called Alderney in the northern part of Channel Islands located between Northern France and UK will be minting Bitcoins in physical form. The island has a population of 1903 persons . It is likely that the coin will have a gold content of US Pounds 500/- to provide a value backing in terms of Gold. The value of this Bitcoin in terms of US $ would be around $818 as against the current value of Virtual Bitcoin around $1200.

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It is an interesting development for economists to think of the consequences.

Naavi

The exploding popularity of Bitcoins and other crypto currency is a matter of concern and intrigue for all economists.

One of the USPs of the Bitcoins for example is the ability to move it from one holder to another holder in about 10 to 15 minutes while international Bank transfers may take longer time.

Also Bank transfers are often revoked several days after the recipient is notified of the receipt while Bitcoin transfer is irrevocable. There have been many frauds committed only on account of “Chargebacks” and revocation of payment orders.

The other advantage of the use of Bitcoins for payments is the absence of transfer charges as against the exorbitant charges collected by Banks.

Lack of central authority or peer to peer nature that is under the control of politicians is said to be another positive feature of the cryptocurrency systems

If economists therefore are envious of the popularity of Bitcoins and are afraid of its power to destabilize the monetary regulations, there is perhaps a need to look at some monetary reforms that take away the consumer advantages enjoyed by cryptocoins.

Perhaps the “Mintchips” concept of the Canadian Government  is an attempt in this direction which other monetary authorities may take a serious look at.

Naavi

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Close on the publicity generated by Bitcoin exchange rate going upto US$1132, many more crypto coins are coming to the attention of the public. First it was Litecoin and now Novacoin, Namecoin, Quark coin,Chinacoin,

Feathercoin also seem to be gaining attention.

If this trend continues we will see many more such crypto currencies coming up on the scene. Will all of them meet the required security and ethical standards? or will any of them spoil the image of current leaders like Bitcoin? needs to be watched out.

The speculation that is building up around Cryptocoins is exciting but causing concerns to monetary authorities and national security agencies.

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Market Cap of different Crypto Coins

Naavi

In an interesting case of misuse of Bitcoin, a video gaming community “E Sports Entertainment Association” agreed to settle a dispute where it had been accused of having illegally installed Bitcoin minining software in their client’s machines and earned US$3713.55.

The company blamed a rogue employee and donated double the amount involved as donation to a cancer institute. The New Jersy Government however also pursued a criminal case which ended in a settlement.

This kind of a fraud could have happened with any other software vendor also. The case highlights how businesses which install their software in client machines for any legitimate software need to take care that such software is not modified by their rogue employees for their personal gain since the vicarious liability for such crimes lies with the Company.

Naavi

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World’s first Bitcoin ATM in operation in Vancouver is said to have clocked transactions of US$ 1 million in a month. The ATM converts cash into Bitcoins and also pays out cash in physical currency against withdrawals of Bitcoins.

The World of Banking is changing!

See Report here.

Naavi