Bitcoin in the limelight: Questions for buyers and investors

Bitcoin exchange vulnerability

The most high-profile vulnerable Bitcoin exchange was Mt. Gox. In April 2013, Mt. Gox was overwhelmed by a Distributed Denial of Service (DDoS) attack. The point, Mt. Gox speculated, was to destabilize Bitcoin transactions and fuel panic selling. After driving prices down, the attackers ceased the DDoS, and rushed in to buy Bitcoin at a lower price.

Life isn't fair but Bitcoin must be

Life might not be fair, but securities exchanges and currency markets require fairness. Without it, they will die. Trust is essential. Apparently, Mt. Gox was robust enough to withstand this DDoS incident. In their pursuit of unearned profits, the attackers took a selfishly short-term view. DDoS attacks and market manipulation can destabilize Bitcoin exchanges. If that happens often enough, it will undermine credibility in Bitcoin.

Mt. Gox wasn't uniquely vulnerable. In the past few months, there were other DDoS-related Bitcoin extortion incidents: BTC-China was brought down in September 2013, and BIPS, a European payment provider, experienced a DDoS attack two days ago, on 26 November 2013.

MintChip denouement

The Royal Canadian Mint is the official mint of the Canadian government. In March 2012, the Royal Mint announced that it would discontinue all future production of penny coins. A week later, the Toronto Star ran a news story, in which the Royal Mint introduced the first national digital currency in North America, the MintChip.

A Royal Canadian Mint spokesman provided the following description:

MintChip doesn’t plan to link to a person’s bank account or credit card information. And unlike BitCoin, a peer-to-peer hosted digital currency with a fluctuating value, MintChip is simply a new way to exchange Canadian dollars. Plus, it’s backed by the Canadian government. 

The MintChip doesn't satisfy criteria for what I would consider a bona fide currency. Rather, it seems more like a type of electronic payment network for the Canadian Dollar.

Golden prize

A rather intriguing contest, MintChip Challenge was announced in the same Toronto Star article. MintChip Challenge was an app developer contest sponsored by the Royal Canadian Mint, with top prizes to include the equivalent of CAD 50,000 of gold bars and coins, in gold bullion, i.e. 99.99% gold.

The top comment on the Toronto Star article offered this suggestion:

Did you know that one of the leading proposals for how to use MintChip is for purchasing bitcoin? Because of the irreversibility of MintChip transactions, this would solve a lot of issues. See paragraph 6 of MintChip Misses the Point of Digital Currency via Forbes.

MintChip Challenge generated much excitement. The 500 entry spots were filled in merely four days! Prize winners were to be announced on 25 October 2012.

What's up with MintChip? 

The official website hasn't provided much information. I was curious. Erstwhile gAt0mAl0 was curious too:

So what happened with MintChip – Canada’s digital currency? It has disappeared into the Bermuda Triangle of digital currency holes – a news blackout. 

The denouement of MintChip Challenge was distinctly anticlimactic. gAt0mAl0 explains more about the Canadian MintChip, and Bitcoins too. Alternatively, you may prefer to explore gAt0's rather impressive Bitcoin Mind map chart, featured in his prior post, Bitcoin and Forex Trading which I enjoyed much more than the entire MintChip mess, from start to muted finish.