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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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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

The success of Bitcoin concept has attracted “Litecoin”  a similar virtual currency system promising some technical improvements. The target for litecoin is 84 million currency units as against 21 million targetted by Bitcoin.

The presence of two virtual currencies in place of one makes the game more interesting and at the same time introduces some competition in improvement of the protocols. At present Litecoin is priced around US$15 with a market capital of US$350/-. Bitcoin on the other hand is priced around US$845 and a Market capital of around US$ 11 billion.

We need to wait and see how Litecoin progresses in competition with Bitcoin and how they together are handled by the regulators.

Naavi