THAT box set you just bought online might have cost 拢20, but this time next year it could set you back three Bitcoins instead.
鈥淭hree what?鈥� you might ask, and you would be far from alone. is an open-source currency that has until now been used mostly by the digital cognoscenti. But both its technology and economy are maturing. If confidence in the currency 鈥� which has had a rocky past 鈥� continues to grow, it may yet break into the mainstream (see 鈥�Virtual economy looms as digital cash grows up鈥�).
If so, there will be a lot of head-scratching going on. For people used to conventional currencies Bitcoin is hard to understand. It isn鈥檛 issued by a central bank, but by a decentralised network of self-appointed users, who mint Bitcoins on their computers.
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It is hard to imagine how such a baseless currency could secure a place alongside the dollar, euro or renminbi, backed as they are by the full force of states and central banks. Nonetheless, an increasing number of businesses have announced that they will accept it as payment. The latest and highest profile is , which hosts 58 million blogs. It points out that Bitcoin has several advantages over credit card payments or PayPal, including wider accessibility and smaller transaction fees.
Of course, Bitcoin may yet hit the buffers. Its unorthodox design creates novel market risks. Its popularity as an anonymous medium for illicit activities will continue to make it unpopular with the authorities. And it remains dogged by reports of accounts being hacked and emptied. If it does become more widely accepted, it will attract closer scrutiny 鈥� and may end up being regulated out of existence.
Like all truly disruptive technologies, Bitcoin is hard to conceptualise at first. But 鈥渇iat鈥� money 鈥� the kind we use today, based on pieces of metal and paper whose material and face value have long since drifted apart 鈥� was once baffling, too.
鈥淭he money we use today, based on now-arbitrary bits of metal and paper, was once baffling too鈥�
Those notes and coins are starting to look redundant as the cashless economy, long a mirage, has begun to look more solid. The next evolution of currency is more likely to be fostered by big banks than Bitcoin. But one way or the other, you should prepare to upgrade your digital wallet.