Security incidents surrounding the disapperance of bitcoins from online exchanges and individual computers has created a lot of buzz on the internet. This has called into question the crypto-currency’s ability to be trusted as a medium of trade although it hasn’t done much to discourage speculators from hoarding coins on the network. And when Mt. Gox fell prey to an BTC 850,000 heist, it was thought that maybe the impending doom that awaited Bitcoin had arrived.
Mt. Gox held the spot of the largest exchange in the Bitcoin network, the loss of nearly half a billion dollars worth of bitcoins caused the online exchange to file for bankruptcy. Its reserves currently stand at BTC 202,000 – leaving 650,000 coins unaccounted for. The exchange blamed the loss of its customers’ coins on a fundamental flow in the Bitcoin network.
On Wednesday, the Bitcoin-QT software was upgraded and rebranded to Bitcoin Core, the rebranding emphasizes the software’s role in running the crypto-coin’s transaction and verification systems. Patches to the software address transaction malleability (which Mt. Gox blames for costing them money), users can now supply a refund address to a merchant, merchants can attach a note to the transaction describing an invoice, and payment requests can be cryptographically signed so that users are certain coins are received by the intended parties.
Bitcoin Core (also the Satoshi client) started out at the reference design for creating bitcoin wallets. According to the Bitcoin Core dev team, future changes will include the removal of non-core functionality – therefore the Satoshi wallet will be split to a different project.
Currently, the combined value of all bitcoins in existence is $8 billion. A report published by Merrill Lynch in December last year, places the crypto-coins long term value at $15 billion. The bank further states that Bitcoin presents serious competition to traditional money-transfer providers. There are many detractors from this line of thought and Boston University’s Mark T Williams presents the case for the other side with a sound argument, “Placing high risk bets on a fad asset is not for the faint of heart. Compared to other assets, Bitcoin is over 7 times as volatile as gold and over 8 times as volatile as the S&P 500. Recent Bitcoin price movements make owning Zambian kwacha seem boring.”
