Hmmm. For the uninitiated Bitcoin is a computer-code based currency, beloved of geeks and drug-runners in equal measure. By some standards this should give it some staying power as the pure hard cash of the criminal world is allied to the computational nous of the geeks.
And to date this has been the case, even today Bitcoins trade at at $440 which is a massive increase on the $30 or so that they traded at last year
It's a classic bubble showing a typical ponzi-scheme type of return to early investors (which, annoyingly I cam very close to buying some at $30 but chickened out!). Today Mt Gox one of the most well know trading houses has closed its doors. It's banking licence has been suspended and whether those who store their coins there will ever get them out is doubtful.
Behind Bitcoin though is one of the biggest questions in the world; what is money? After all, even gold you cannot eat. Neither of course can you eat a Bitcoin, nor even really store it without electricity.
Yet today's Governments across the world have debased money in a way that has never happened outside a hyper-inflationary incident in history. Trillions of dollars and pounds have appeared on the balance sheets of the Fed and Bank of England - but who owns the Bank of England? Where is this money from? The reality is that it is a fiction - the complexity of which hides from everyday people the con-trick of fiat currency. You and I may struggle to earn a few hundred pounds a week - yet the Bank of England will create and spend that in a few millionths of a second.
Bitcoin, for all its faults (i.e. people hack computers, don't they, even NASA...), seeks like Gold to provide a currency that is not controlled by central banks and manipulated by Governments. In the long-term this type of currency, with set inflation linked to productivity growth only, is surely the answer to the world's monetary problems - its unlikely to be Bitcoin, but at some stage in the future a version will replace the dollar as the world's reserve currency.