Update on Bitcoin: The Rise & Fall
Bitcoin, the virtual peer-to-peer currency that was launched in 2009 (see CAT blog June: Barter P2P Currency Gains Traction), had a meteoric rise in April-June of this year—but after a hacking attack on the premier bitcoin exchange, the currency plummeted, then rose again. Today it traded at $2.40, down from a peak of $30, but still way up from the pennies it priced at 18 months ago.
In a recent WIRED article Benjamin Wallace reports that –
In the public’s imagination, overnight the bitcoin went from being the currency of tomorrow to a dystopian joke. The Electronic Frontier Foundation quietly stopped accepting bitcoin donations. Two Irish scholars specializing in network analysis demonstrated that bitcoin wasn’t nearly as anonymous as many had assumed: They were able to identify the handles of a number of people who had donated bitcoins to Wikileaks. (The organization announced in June 2011 that it was accepting such donations.) Nontechnical newcomers to the currency, expecting it to be easy to use, were disappointed to find that an extraordinary amount of effort was required to obtain, hold, and spend bitcoins. For a time, one of the easier ways to buy them was to first use Paypal to buy Linden dollars, the virtual currency in Second Life, then trade them within that make-believe universe for bitcoins. As the tone of media coverage shifted from gee-whiz to skeptical, attention that had once been thrilling became a source of resentment.
