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Obama administration moves to crush virtual currencies

Janet Napolitano’s iron heel came down on bitcoin today.

From Staff

DHS obtained a Federal court order barring discount payment processor Dwolla from sending or receiving bitcoins. Dwolla is the main payment processing service used to do business with the Tokyo based virtual currency exchange Mt. Gox.

In recent days the Obama administration and the media have been demonizing virtual currencies. Among other things, bitcoin users are supposed to be money launderers, drug dealers, contributors to “man made global warming,” and aiding the regime in Iran.

Bitcoins presently have a combined value of over $1 billion, which is more than that the currencies of several small countries. The currency is created by “mining.” This is mainly done by loading a motherboard with multiple high dollar graphics cards and using the GPUs on the graphics card to do math problems that secure the encrypted network. The miners are rewarded with new coins. As the total “hashing power” of the mining network increases, it becomes harder for each person to obtain a bitcoin reward. However the bitcoins have consistently gone up in value. Mining bitcoins is so popular that companies have invested huge amounts of money to make specialized hardware, known as ASIC chips, just for mining bitcoins.

Major copycats, including Litecoin, Freicoin, Feathercoin, Terracoin, and many more have been launched. The creators of these rival currencies boast that ASIC hardware designed for bitcoin, will not give the owners an advantage with their currencies. Specialize bitcoin ASIC hardware is eliminating the ability to mine bitcoins with GPUs. People with GPU mining rigs are moving to rival currencies in hopes that one of those will explode in value like bitcoin did.

Bitcoins have gone from a few cents each in 2010, to over $100 each today.

Buying virtually currencies also hold significant risk. Virtual currencies are vulnerable to scams and hackers. The anonymous nature of bitcoins itself, make them an inciting target for cyber criminals. Use at your own risk.