As the virtual currency Bitcoin has gained popularity over the last few months, its value has skyrocketed. One user who had amassed 25,000 BTC (Bitcoin currency units) estimated its value at $500,000. He awoke one morning to find it had disappeared from his online account. “Needless to say, I feel like I have lost faith in bitcoin,” said the user ‘allinvain’. He speculated that a Windows security flaw may have allowed the culprit to gain access to his digital wallet. ‘I feel like killing myself now,’ he said.
What’s the Big Idea?
While a virtual currency independent of the banking system is tempting, especially in the wake of the financial crisis, banks do offer protections and guarantees which Bitcoin users currently do not enjoy. “For example, federal regulations limit consumer liability for fraudulent credit card transactions to $50, and some banks offer cards that reduce the consumer’s liability to zero. And because liability for fraud falls mostly on the banks and credit card networks, these parties have invested in infrastructure to detect and deter fraud.”