Thursday, May 24, 2012

The Evolution of E-Money

I introduced digital bearer certificates and bitcoin at the 7th annual ITWeb Security Summit in Johannesburg, South Africa (May 15-16th, 2012).
The Evolution of E-Money

For further reading:
"E-money raises privacy concerns", Nicola Mawson, ITWeb, May 17, 2012
"Bitcoin: a mobile money alternative", Gareth van Zyl, ITWeb, March 26, 2012


  1. Bitcoin is missing one currency attribute which is normally required - it has neither underlying value, as with commodity currencies, and no driver or legal use, as with the ability to pay taxes with it. Consequently even more than with bank-credit, and more than with greenback currencies bitcoin has only the confidence of the users to make it 'current'.
    Bernard Lietaer classified bitcoin as a speculative instrument.

    1. There are two things you need for "value": scarcity and demand. Combine those and you get a price. Bitcoins are scarce by design. And there's a demand for bitcoins because they are useful. They are useful AS A CURRENCY, i.e. a medium of exchange, a store of value, and a unit of account. Bitcoin has all of the attributes of a good currency: scarcity, fungibility, ease of identification, difficulty of counterfeiting, divisibility, ease of transporting, etc. Historically gold and other precious metals were used as currencies because they also possessed those features (but not to the degree that bitcoins do). Yes, gold has OTHER uses in addition to its usefulness as a currency (e.g., jewelry), but a big part of the reason that it's in demand (and hence as valuable as it is) is because of its monetary usefulness. I'd recommend reading Erik Voorhees' introduction to Bitcoin for a more detailed explanation.

  2. @MATSLATS, gold and silver has no underlying value either except what we give it. And bitcoin is back by productivity and confidence. Utimately, besides the usual attributes that makes anything money, confidence is the the most important attribute above all.