Leading economist Professor Jon Rushmore has defended the Internet’s own currency Bitcoin against fears it could be used by drug dealers or terrorists.
The US Department of Homeland Security suspended trading in Bitcoin at the Dwolla exchange following a volatile period of big swings in its real-world monetary value which settled around $120 per Bitcoin. Former Democrat Senator Joe Lieberman has criticised the virtual currency, saying it may be used for drug deals or terrorism. Interviewed by FI editor Peter Warren, Professor Jon Rushmore of Warwick Business School said those statements by the former Senator were unhelpful…
“You might as well say that you should ban the trade in cash” .
Professor Rushmore made the point that cash is the currency of choice for criminals since it is completely anonymous and hard to trace. He praised the Bitcoin, saying it has many positive features. For example, it is outside the control of governments and so there is no way that central banks can just switch on the printing press and print lots of money to decrease the value of their debt. From his point of view, the only downside is that there is a finite number of Bitcoins (21million) and as more and more are discovered the value of each one rises accordingly until it reaches the limit of its value. ” A little bit of inflation seems to be good for growth. I don’t know whether it’s the human psyche that needs prices to go up..a lot of central banks target this 2 percent inflation growth. It’s a small number but it’s still a positive number.” Click here to hear the full interview Jon Rushmore
What is a Bitcoin?
A Bitcoin is a unique, long and elaborate number. It is derived by using the processing power of a number of powerful computers networked together to run an algorithm to produce the special number. This process is known as data mining, because there are only 21 million of these unique numbers in existence and the more Bitcoins are discovered, the more difficult it becomes to find the small number remaining. Bitcoins are used for online trading and are popular with businesses that serve a libertarian clientele – for example in the Kreuzberg district of Berlin, a bohemian quarter with a long tradition of civil disobedience dating back to before the fall of the Berlin Wall in 1989 which ended the Cold War division of Germany between the two client states West Germany (British/American-influenced) and the DDR or German Democratic Republic (Soviet Union-controlled). Online you could also use Bitcoin to buy goods and services that you may wish to keep hidden from your family, such as those provided by the MyGirlFund website.