BitCoin has certainly had a tumultuous week, from exchange problems and transfers frozen to a $2.7 million theft, this caused Venture Beat to ask if the end was near for Bitcoin.
Silk Road 2.0, a black market drug-trading site based on untraceable Bitcoins, reports that 4,474 Bitcoins, valued at about $2.7 million, have been stolen from the site. The virtual currency is encrypted computer code that is stored in a virtual wallet, and only a limited number of Bitcoins are created.
The site’s administrator, who goes by the name of Defcon, posted that “a vendor exploited a recently discovered vulnerability in the Bitcoin protocol known as ‘transaction malleability’ to repeatedly withdraw coins from our system until it was completely empty.” The coins were apparently stored onsite in escrow.
There is also a new currency coming on the market, NoFiatCoin, one would think they could have come up with a better name, but the whole idea behind NoFiatCoin is that it is partially backed by Gold and Silver. Rebecca Grant wrote a piece on Venture Beat that detailed the thinking behind NoFiatCoin.
An oft-cited concern with crypto-currency is that it is not backed by anything “real.”
NoFiatCoin (XNF) is a digital currency backed by gold and silver bullion. The idea is to combine the benefits of digital currency with the relative security of precious metals.
At least one-third of every batch of XNF released into the market is backed by gold and silver coins. The transactions happen through Ripple, “the world’s open payment system.” You create a Ripple wallet, and buy XNF with U.S. dollars through Bitstamp, or exchange Bitcoins for XNF through Ripple. When you want to cash out, XNF will mail you (as in, physical mail) the value in coins.
“Unlike other alt coins, we redeem our own balances — you can come in-and-out of the digital currency world with hard assets,” founder Robert Reyes told VentureBeat.
However, buying XNF requires a significant amount of trust in Reyes and his team. E-gold’s proprietors were indicted by the US Department of Justice on four counts of money laundering.
Reyes said XNF is taking measures to protect against this type of thing and is in the process of striking a deal with a “reputable” insurance company. It is also being careful to avoid regulatory issues by avoiding certain markets (like the US).
“We don’t need banks anymore,” he said. “Honestly we don’t. To me the financial system is all a scam. The landscape changes every day, with governments coming out with new warnings, restrictions, and regulations. Any minute they can flip the switch. And if Bitcoin crashes, all you are left with is ones and zeros — binary code isn’t worth anything. That’s why assets are so important, they give people security.”
Could this be the next iteration of crypto currency ? This hybrid approach could be something that takes hold. Yes HybridCoin.com is registered.