Online-Only Currency BitCoin Reaches Dollar Parity

IamTheRealMike writes "The BitCoin peer to peer currency briefly reached exchange parity with the US dollar today after a spike in demand for the coins pushed prices slightly above 1 USD:1 BTC. BitCoin was launched in early 2009, so in only two years this open source currency has gone from having no value at all to one with not only an open market of competing exchanges, but the ability to buy real goods and services like web hosting, gadgets, organic beauty products and even alpaca socks."

The real threshold

[Drakkenmensch]

You'll know that this currency has achieved official status once you can start renting escort services with it.

Re:Here you see what two people can do!

[Gleapsite]

The exchange volume on the mtgox exchange is currently 57239. So a bit more than 2 people.

See ref: http://www.mtgox.com/trade/history [mtgox.com]

Re:O-key

[sturle]

I've sold a lot of bitcoins (in the past when the value was lower than 1/4 of it's current value) for normal money in the bank, and I have bought coffee, gadgets, a month of VPS and more for bitcoins. My main use of bitcoins now is to transfer money to a foreign account without paying outrageous fees to my bank. (The foreign account is for paying expenses in that country, not for tax evasion or anything illegal.) I buy bitcoins in my currency and sell in the other. Often with a profit as well. Can't do that with monopoly money.

There are several problems here

[Omnifarious]

First, a fixed number of bitcoins will not actually work. The smallest unit of value people will want to exchange is not one 21 millionth of all the units of value in the world. It will be significantly smaller than that. As the total size of the economy expands, the total value people will want to exchange as a fraction of the size of the economy will become smaller and smaller.

Secondly, the way the system works affords no transaction anonymity. And for a currency to be 'real' this is a big deal.

I have long felt that in order for any currency to work, it must be able to be 'stolen'. In other words, you must be able to use it to engage in transactions that are not legally sanctioned.

Of course, the identity behind any given public key in the bitcoin network is something of a mystery. But it's not that hard to trace, especially since it's possible to compile a complete and unbroken history of all transactions any bitcoin has been involved in.

This is an interesting experiment, but I don't think it's a replacement for currency.

Re:In other words

[cheezedawg]

It will never be worthless. The US Treasury Dept only accepts US dollars for tax payments, so we need to have dollars to pay our taxes, or we go to jail.

Re:meaningless

[harks]

True. Dollar-parity is just a psychological milestone. What is meaningful is that Bitcoin has increased from about $.05 in September to $1 now.

Re:...wow

[Teancum]

Selling CPU time for money has been almost as old as computing itself, and most of the time you didn't worry about malicious code or anything silly of that nature. You certainly could build a CPU emulator (java/flash/mono) which will run executable code in a "sandbox"... and it is being done in various ways even now with virtual machines of various kinds. The Seti@Home project showed you could even queue jobs in various ways for a mass computation effort.

The only point of selling that for Bitcoins is that the Bitcoin becomes the currency instead of Dollars or Euros. There are some advantages of using Bitcoins (lower overhead for transactions and the ability to calculate micropayments in an easier fashion), but you aren't using CPU bandwidth as the currency. The whole point of the hashing algorithm which "mines" the coins is merely to introduce scarcity and to "spread the wealth" while the currency is being established.