A new parallel currency is circulating on the Internet: Bitcoins can already be used to buy pizza, weapons and drugs. But what happens when virtual gold becomes a coveted object of speculation?
The story sounds like the blurb of a postmodern novel by Don DeLillo or David Foster Wallace. In January 2009, a developer called Satoshi Nakamoto provided the first coins for a digital currency. Nobody knows who is behind the pseudonym. The supposed Japanese is the author of a nine-page document, which is referred to in the network community as a “white paper”. Then suddenly Nakamoto disappears. Allegedly because he wants to do other things. He may now be growing ornamental gourds or he may be writing haikus as his invention continues its steep rise.
Bitcoin is the name of the virtual currency that Nakamoto created. The first real economy transaction took place in May 2010 in Jacksonville (Florida). A programmer bought two pizzas for 10,000 Bitcoins, which he ate with his little daughter.
Because the demand has exploded in the last few months, these 10,000 Bitcoins would be worth around one million euros today. No wonder that many people prefer to buy bitcoins instead of pizzas, they hope for speculative profits. Other buyers, particularly in Spain and Greece, are looking for a safe haven currency. Still others are free spirits who want to trade anonymously without government surveillance or paying fees to financial institutions.
Buying bitcoins is quite easy, they are traded on bitcoin exchanges, all you need is a computer program. Creating bitcoins, on the other hand, is much more complicated. For the typical feuilleton reader who just uses e-mail and Google, the process is difficult to understand. It helps to think of money creation as a digital version of …Read more