Saturday, April 6, 2013

A Primer on Bitcoin

Faced with currencies under pressure, many are looking into healthier means of storing their wealth. Gold, silver, but also Bitcoin is fast becoming a popular investment. Bitcoins, a virtual currency, is a peer-to-peer cryptographic system to verify transactions. A number of websites have now started accepting payments by Bitcoins. The currency has now surpassed $1 billionUntouchable by Government, Or Is It?

But warnings are in order. The Japanese Bitcoin exchange, Mt. Gox which is rated as the largest exchange, was hit by a DDoS attack late Thursday. The assault was more powerful than usual. It must be stressed that the currency itself was not compromised. 
In 2011 Mt. Gox admitted to a major breach and has shut down. In an unprecedented action 500,000 coins went missing, as was the Mt. Gox database, which included 61,020 entries. In all, approximately $8.75 million worth of Bitcoins temporarily went missing in the intrusion.
What's more, as Zerohedge has pointed out, few things in life these days are free from our loose cannon governments: "US Begins Regulating BitCoin, Will Apply "Money Laundering" Rules To Virtual Transactions" and "the ECB issued an exhaustive, and quite ridiculous, pamphlet titled "Virtual Currency Schemes" in which it mocked and warned about "ponziness".
Whatever you decide, do your homework before deciding where to store your value. Happy investing!

"When a state currency is challenged, the state itself is challenged, and market forces move swiftly around sickly, depreciating inhibitors."

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