In five years, might the Bitcoin market be little more than a smoking ruin?
That's the dystopian future facing crypto-currency traders, if the current pace of attacks against Bitcoin exchanges and holders continues. Both could see a never-ending onslaught of distributed denial-of-service (DDoS), hacking, and malware attacks designed to drain their virtual currency coffers.
But the possibility that Bitcoin might burn is good news for anyone who cares about crypto currencies, as well as the future of our monetary system. In other words, just because one cryptographic currency gets pummeled, the odds are that the next "Satoshi Nakamoto" will build an even better one.
Beyond Bitcoin, which has the world's largest virtual currency market capitalization (nearly $8 billion), there are at least 100 other crypto currencies, ranging from Ripple ($1.4 billion) and Litecoin ($453 million) -- also at the high end -- to Deutsche eMark ($106,000) and Grumpycoin ($88,000) at the low end. Even criminals have begun to diversify into homemade crypto currencies, because they see Bitcoins as being too volatile for storing their ill-gotten gains. Meanwhile, a Lakota Indian named Payu Harris is even promoting a new crypto currency called Mazacoin, which he hopes will provide the Lakota nation with greater independence.
When it comes to the prospect of nations minting virtual money, Harris might be on to something. According to former Central Intelligence Agency CTO Gus Hunt, in the future, the dollar could well become a crypto currency. "Government's going to learn from Bitcoin, and all the official government currencies are going to become crypto currencies themselves," he said during a recent panel discussion in San Francisco hosted by information security firm eSentire, for which he sits on the board of advisers.
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Mathew Schwartz served as the InformationWeek information security reporter from 2010 until mid-2014. View Full Bio