Bitcoin, an anonymously digital currency,
is an online virtual �barter good� that is currently gaining ground as an
alternative to dollars and euros. Bitcoin recently
�drew international attention through Cyprus�s banking emergency, its
inclusion in the American financial regulatory framework, and increasing
coverage.�
Bitcoins are generated electronically, and �the
whole thing is run by powerful computer systems owned by people called
�miners.�� In this new world of virtual currency, the use of Bitcoins can have some advantages over paper or plastic.
In the United States, Bitcoins are mostly unregulated. Canada,
however, has a much stricter regulatory environment, as several businesses
and entrepreneurs have found out. Just recently, James Grant of Canadian Bitcoins and Melvin Ng of CADBitcoin,
both of whom operate Bitcoin exchanges, were
contacted by the Royal Bank of Canada and TD Bank and informed that their
accounts would be frozen. The banking authorities have not explained their
reasoning, but to Grant, it�s obvious: "They don�t like Bitcoins.�
Joseph David, who owns Virtex, an online market
based in Calgary that matches Bitcoin buyers with
sellers, was informed earlier this month by the Royal Bank of Canada that it
would no longer do business with his establishment. "They shut down our
account without any reason,� David said. For reasons unknown, many of
Canada�s banks are hostile to the small but
fast-growing Bitcoin businesses, but what is
becoming increasingly clear to some is that �they don�t like the cryptocurrency and they�re shutting down some of the
accounts of businesses that deal in it.�
Mr. Ng maintains that banks are undoubtedly feeling threatened by this new
virtual currency, �as Bitcoins will soon replace the need for
banks to transfer money across borders.� He goes on to say, �Bitcoins will revolutionize the banking industry, just
like Bittorrent changed the video and music industry.�
Conversely, many in the banking industry warn that Bitcoins
are �inherently unstable,� pointing out the fact that the currency has been
extraordinarily volatile, �with the value of a single Bitcoin
ranging from less than $1 back in 2008 when it was first created to as much
as $260 earlier this month.�
Nonetheless, Bitcoins are seen by many as having
both great advantages and great risks, and whether this virtual �money� will
take hold is still to be determined. Perhaps the statement, �If the Internet
is the Wild West, Bitcoin is its wampum,� sums it
up best.
