Is Bitcoin the currency of the future?

Some financial experts are wondering if digital coins could be the currency of the future.

More and more people are using a virtual currency called Bitcoin, but it's not clear yet whether it's the future or just a fad.

"What got me really interested about Bitcoin was the fact that you can literally send payments from one person to another without a central clearing house, bank, government, corporation, all of that - and it was truly person to person," says co-owner of EVR Gastro Lounge Charlie Shrem.

The virtual online currency was invented by computer programmers - a Bitcoin can be transferred through a computer or smart phone, making them difficult to tax or trace.

"I think that's part of why people are finding Bitcoin attractive, that it's really the first widespread, completely anonymous, form of digital currency," says Arun Sundararajan, a professor at New York University.

It's been used for money laundering, but it's also been adopted by people in countries like Cyprus, worried about the safety of their own banks.

The price of a Bitcoin soared to around $266 earlier this month, before panic selling sent the Bitcoin plummeting.

Another challenge for Bitcoin is that because it's beyond the oversight of any government the usual consumer protections don't apply.

"Bitcoin would quite qualify as a high-risk investment," says Mt Gox chief executive Mark Karpeles. "If you buy Bitcoins, you should keep in mind the value could be zero the day after."

Here in New Zealand the Geekzone website has experimented with letting people pay for their subscriptions with the digital currency, with a small number using it.

"There is a Bitcoin exchange in France that is actually backed by a bank, so with time this will be more accepted in real life, in the physical world," says Geekzone administrator Mauricio Freitas.

"The most important part for Bitcoin to grow is for merchants to accept Bitcoins, because as more major merchants accept Bitcoin the more interest people have to buy, because they actually use those Bitcoins at merchants," says Mr Karpeles.

To help that happen Bitcoin's early adopters will meet for a conference next month in California to map out the currency's future.

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source: newshub archive