Bitcoin too is costly to produce (to ‘mine’, using high-powered servers that could be doing other, more useful things instead, using energy both to keep the servers running and to cool them).
The algorithm governing Bitcoin is supposed to set an absolute upper limit 21 million bitcoin units, although anything that can be programmed can be reprogrammed.
Counterfeiting (gold painted lead ingots) are of course a risk (as it is with paper currency and, for all we know, with Bitcoin).
Bitcoin is not anonymous, because every unit of Bitcoin is held in an electronic ‘wallet’, which has a clear and, in principle, identifiable owner.
It is possible to hide (through encryption) the identity of the current beneficial owner of a Bitcoin wallet, just as it is possible to hide the identity of the beneficial owner of a bank account behind an array of corporate, trust or personal fronts.
willembuiter.com/gold2.pdfWillem Buiter
+1-212-816-2363
willem.buiter@citi.comAnyone to comment on this?