Inside Money

Business writer David Chaplin blogs on personal finance

Inside Money: Technomoney - software dream or virtual nightmare?

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Old school money - Bitcoin may replace the paper. Photo / Hawkes Bay Today
Old school money - Bitcoin may replace the paper. Photo / Hawkes Bay Today

In the car I could only hear bits and pieces of the guy on Jim Mora's chat show through the static.

'Bitcoin... crackle... no inflation... crackle... end of fiat currency...,' I heard before the white noise drowned him out completely.

What crappy old technology radio is.

New technology saved the day courtesy of the Radio NZ website. And it will save the world, according to the Bitcoin believers.

Since its 'stable release' this April the Bitcoin story has gone viral.

At the latest market value, one Bitcoin will set you back more than nine US dollars

The software backing the "P2P [peer-to-peer] virtual currency" could be a significant technological breakthrough but does it herald the end of the tyranny of money as we know it?

Is it "Our greatest hope for liberty" or the "most dangerous project" ever devised by computer geeks?

Or perhaps another over-hyped IT scam designed to place our lives even more into the hands of software developers?

Here's what the Bitcoin designer, Satoshi Nakamoto, has to say about it:

"What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.

"Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions.

"The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes."

Got that, or was there too much static?

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