February 2012

Social Currency Unleashed: Bitcoin? (on FastCoExist)

Here's one of our big ideas from last week's overview. I take the helm here and dive in to alternative currencies, like the crazy new kid on the block -- bitcoin.

Is bitcoin a key to unlocking social currency?

The earlier attempts all were centralized startups, each proposing a competing faux-currency to ease online (providing simplicity and improving trust) transactions and slowly build a virtual currency of sorts. Their business plans generally involved taking margins from the transactions or cost differentials. The early Internet currency attempts ran into regulatory problems (most countries frown upon private companies setting up alternate currencies, it turns out), and had to evolve their offerings to avoid getting shut out.

Bitcoin provides something different. Instead of a currency that has evolved from being backed by precious metals into fiat currencies, Bitcoin is backed by cryptographic algorithms, and has no company--or even an identifiable person--behind it. This shared system provides an amazing openness for a currency: Every transaction is part of a public, collaborative log. However, the people behind those transactions are known only by their account numbers, in a world where you can create as many accounts as you like.

Read the full article at Fast Co.Exist