Bitcoin – Finally, Fair Money? by The Wine and Cheese Appreciation Society of Greater London and Scott Len, Mute:
Bitcoin is a decentralised digital currency deploying peer-to-peer networking to enable secure and anonymous transactions without a central bank. Unlike many economic commentators, The Wine and Cheese Appreciation Society and Scott Len take the currency seriously but ask, how exactly does it differ from ‘real’ money?
In 2009, Satoshi Nakamoto designed a new electronic or virtual currency called Bitcoin, the goal of which was to provide the equivalent of cash on the internet. Rather than using bank or credit cards to buy stuff online, a Bitcoin user will install a piece of software, the Bitcoin client, on his computer and send Bitcoin to other users directly under a pseudonym. One simply enters into the software the pseudonym of the person one wishes to send Bitcoin, the amount to send, and the transaction will be transmitted through a peer-to-peer network.ii What one can specifically obtain with Bitcoin is somewhat limited to the few hundred websites which accept them, but includes other currencies, web hosting, server hosting, web design, DVDs, coffee in some coffee shops and classified adverts, as well as the ability to donate to WikiLeaks and to use online gambling sites despite being a US citizen.iii However, what allowed Bitcoin to break into the mainstream – if only for a short period of time – is the Craigslist-style website ‘Silk Road’ which allows anyone to trade Bitcoin for prohibited drugs.iv On 11 February, 1 BTC (Bitcoin) exchanged for $5.85, 8.31 million BTC were issued so far, 0.3 million BTC were used in 8,600 transactions in the last 24 hours and about 800 Bitcoin clients were connected to the network. Thus, it is not only some idea or proposal of a new payment system but an idea put into practice, although its volume is still somewhat short of the New York Stock Exchange.