This article discusses the theft of about $228,000 worth of online currency known as Bitcoins.
The intersection of currency and the Internet has always made me uncomfortable. I believe that the economy is a mostly abstract thing, as money has no value except for the value we give it, as illustrated with recent bubble bursts (auto and housing as well as others). Through speculation and other financial tricks, people can acquire large amounts of money just by knowing and gaming the system. This a tangent however.
I think that online currency or even financial interactions online are too easy to be taken advantage of by one party or another. I've heard of issues with PayPal where transactions go bad, and one party to the transaction loses money for various reasons.
Because the money is virtual, it is harder to keep a grasp on it, and more likely that hackers or even unscrupulous businesspeople will fudge the numbers. Cash is stable because it is a physical good. Much revenue can come from online business, but it is less trustworthy by far. If a system could come about for reliable transactions, the online market could live up to its potential much more. Not to mention data mining by credit card companies regarding purchases both on- and offline...
With the introduction to technology, currency is becoming less safe as we know it. There's so many faults that could give way to losses as mentioned in your post. I personally think we should go back to the old system of barter and exchange, but we sadly can't :(
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I agree with a lot of what you said, but I'd like to add a few points. While it is true that problems arise with online transactions, cash transactions have problems that online ones don't, like counterfeit currency. I'm not sure what goes wrong in the transactions you mention, but it's likely that in both cases, it's being worked on. I'd disagree that it's harder to keep a grasp on virtual currency, as any good system has backups and histories that the host can look up and use to recompense losses, as Bitcoin has chosen to do, while cash, well, if it's stolen, then it's gone. If the unscrupulous business people you mention are parties in the transaction then whether virtual or real probably wouldn't make much of a difference. If they're outsiders, then yeah, there are dangers, but even larger institutions are working on keeping them away. As for the stability of cash as a physical good, well, all that floats into my mind is "The Great Depression" (most value vanished and bills became little more than paper (if I remember my history lessons correctly)); I have no idea how virtual currency weighs in in this regard, but I'd say it's no better.
ReplyDeleteAnd yeah, the entire economic system is way too volatile. Barter and exchange is probably the most robust system: everything is real. Hopefully, systems in general will become more reliable.