King Solomon tells us that wisdom and prudence are more desirable than the “merchandising of silver.” (Proverbs 3:13-14) And the great King was surely the arbiter of the value of silver, gold and other kinds of currency in his kingdom, just as governments and banks do in modern times. But the rise of the Bitcoin and other digital currencies demonstrates that today, anyone with a computer can create viable digital money –for free.
The worldwide explosion of interest in the Bitcoin is forcing financial experts to take a look at how alternative currencies can – and should – work. These kinds of digital monetary systems might be backed by tangible assets like gold or silver, or nothing more than an algorithm and the intent of the users’ network. They can work within a defined network of users, like the Ven, or compete on the open market like the Bitcoin itself and its imitators such as the Litecoin.
But whatever the system, there’s open source technology to make it so. The Open Transaction Project is a free platform that lets users manage a variety of financial transactions digitally – and that includes creating new digital assets. The OT platform lets users transfer digital assets safely, securely – and anonymously. You can create an account with a virtually unlimited number of pseudonyms, or operate without an account to conduct transactions with unlinkable digital money – rather like using cash in the physical world.
The OT Project isn’t new. It’s the brainchild of the cypherpunk movement – not to be confused with the science fiction term cyberpunk, from which it’s obviously derived. Cypherpunks are cyberspace activists, advocating for stronger crypto-security to protect privacy and improve online security and safety. The movement is regaining steam recently thanks to the ongoing saga of NSA snooping and massive cyberhacks like the one that hit millions of Target shoppers before the holidays last year.
OT also operates on other levels, with options for managing contract-based transactions like payment plans and market orders. It’s gaining attention among entrepreneurs and companies who want to keep transactions private and secure – and among Bitcoin miners, network managers and free thinkers who simply want to create a system that’s free of government intervention and regulation.
The relatively easy availability of this kind of platform worries proponents of traditional monetary systems, who see a collapse of world money markets if unregulated digital currencies flood the marketplace. But advocates of the Bitcoin and other kinds of digital money say that the OT and similar technologies are democratizing money and putting power where it belongs – in the hands of users.
It’s too early to tell where the digital revolution, led by the Bitcoin, will go. But the cyber-genie is out of the bottle, and the capability to redefine money as we know it is now in the hands of anyone with a computer. As Jason Hartman advises, it’s a time for investors to stay informed and aware – or be left behind in the digital dust. (Top image:Flickr/DennisAfton)
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The Solomon Success Team
