Wednesday, May 8, 2013

Wary of Bitcoin? A guide to some other cryptocurrencies

It might have passed you by, but an essential part of the internet's infrastructure took a heavy knock last week. The Silk Road -- you know, " the website where you can buy any drug imaginable" -- was subjected to a series of distributed denial of service (DDoS) attacks.

Calling the Silk Road "essential" might seem an exaggeration, but it won't be if you're one of its many regular users. Nor if you're a regular user of Bitcoin -- its journey to mainstream acceptance began with the Silk Road, being as it is perfect for anonymous, untraceable transactions (as long as you're careful not to make your identity obvious, of course).

Right now, Bitcoin is undeniably a mainstream currency, even if it is not necessarily popular in the sense of being used by a significant proportion of society. That is, it is viewed as a legitimate method of payment, and a legitimate asset, by the people who matter in these issues -- CNBC has it as a ticker on its website, for example, and there's a Bitcoin hedge fund in Malta.

That isn't to say it doesn't have issues, though. The Bitcoin bubble was a fascinating game of musical chairs played out over several months -- everyone knew the music would stop, but nobody wanted to guess when that might be while there was easy money to be made. Also, DDoS attacks have been incredibly effective at manipulating Bitcoin's value. Closing a large exchange like Mt Gox, even if only for a few hours at a time, could cause enough of a price fluctuation for canny hackers to buy low and sell high at their own whim. - Read more here:

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