Dig­i­tal dol­lars

Sunday Tasmanian - Tassie Living - - EGuide Web -

ONCE upon a time, you needed cash money to buy things.

Not any more. We are ap­proach­ing a ‘‘ cash­less so­ci­ety’’, where a card, code or pin num­ber is all that’s needed to buy and sell tan­gi­ble things.

Elec­tronic money is now an ev­ery­day thing; from Elec­tronic Funds Trans­fer ( EFT), to di­rect de­posit, in­ter­net bank­ing, credit cards and stocks.

But they’re all linked to real-world funds even if the funds are merely numbers in a bank ac­count and money is evolv­ing be­yond that.

Vir­tual currency ( or in-game or in­world currency, de­pend­ing on the environment) is used to pur­chase vir­tual goods within a va­ri­ety of online com­mu­ni­ties, in­clud­ing so­cial net­work­ing web­sites, vir­tual worlds and online gam­ing sites.

World of War­craft gold made head­lines when it was dis­cov­ered that peo­ple were sell­ing vir­tual prop­erty and vir­tual gold for real-world dol­lars.

More com­monly used sys­tems, such as Pay­Pal, We­bMoney and cashU, sell their elec­tronic currency di­rectly to the end user, but other sys­tems such as Lib­erty Re­serve only sell through third party dig­i­tal currency ex­chang­ers. Bit­coin is new, and it’s dif­fer­ent. Bit­coin, or BTC, is a de­cen­tralised currency not tied to one web­site. There is no one cen­tral au­thor­ity con­trol­ling it. It’s an anony­mous, un­trace­able, peerto-peer currency.

Yet like tra­di­tional currency, Bit­coin can be used to buy, sell and make pay­ments online and off­line, buy down­loaded movies, pur­chase dig­i­tal equip­ment and even pur­chase il­le­gal drugs online. Bit­coins are cre­ated by dig­i­tal ‘‘ min­ing’’ of cryptic in­for­ma­tion via su­per-fast com­put­ers, and there will only ever be a fixed num­ber of BTCs cre­ated – just un­der 21 mil­lion – to avoid less­en­ing their value.

‘‘ It wholly re­places state-backed cur­ren­cies with a dig­i­tal ver­sion that’s tougher to forge, cuts across in­ter­na­tional bound­aries and can be stored on your hard drive in­stead of in a bank,’’ Forbes. com re­ports.

‘‘ Per­haps most im­por­tantly to many of Bit­coin’s users, [ it] isn’t sub­ject to the in­fla­tion­ary whim of what­ever Fed­eral Re­serve chief de­cides to print more money.’’

Un­reg­u­lated currency sounds dicey. And it is. The currency has been hacked to the tune of 25,000 cred­its and again days later for 400,000 BTCs worth al­most $ 9 mil­lion.

Dodgy busi­ness, but that’s the risky na­ture of the online fron­tier.

This is a bold at­tempt to cre­ate a real-world currency with no gov­ern­ments, no banks and no rules.

In the age of cit­i­zen jour­nal­ism, cy­ber ac­tivism and vir­tual-to-real-world events such as Oc­cupy Wall Street, it’s not such a sci­encefic­tion con­cept.

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