LONDON, April 2 | Sun Apr 1, 2012 7:01pm EDT
(Reuters) – Financial traders have a new toy: Bitcoin, a digital currency variously dismissed as a Ponzi scheme or lauded as the greatest invention since the Internet.
Unlike conventional fiat money and other digital currencies, Bitcoin runs through a peer-to-peer network, independent of central control. Bitcoins are currently worth $4.88 each on online currency exchanges, where they can be bought and sold for about 15 world currencies.
Users – an odd assortment of uber-geeks, anarchists, libertarians, scammers and forex traders – sent about $4.3 million worth to each other in the last 24 hours.
Banking and payment expert Simon Lelieveldt believes they are living on borrowed time.
“There is always a power base underlying a currency,” he said, speaking at the Digital Money Forum in London in March.
“Bitcoin is not going to fly because there is no central bank or power base. It’s doomed to fail.”
But its separation from power is precisely what attracts many users.
“Bitcoin is not run by people with hot sexual appetites for hotel maids. It is not run by corporations. It is not governed by people with budgets to meet. It is governed by a mathematical formula,” one trader and Bitcoin enthusiast told Reuters over a pint of Guinness in London’s financial district.
He also likes that there is an absolute limit of 21 million Bitcoins built into the system.
“If you try to print more than 21 million Bitcoins, you will be rejected by cold, loveless computers whirring away in nerds’ garages. It is a better form of money than we have right now, or than anyone has designed so far.”