It was only last month when the open source virtual currency Bitcoin was generating enormous buzz and it seemed like a promising idea for OpenSim to use Bitcoin as its main currency. Since then, however:
- Wired: New Malware Steals Your Bitcoin
- Venturebeat: Popular Bitcoin exchange Mt. Gox hacked, prices drop to pennies
- EFF: "[W]e’ve recently removed the Bitcoin donation option... [from] the EFF website... We don't fully understand the complex legal issues involved with creating a new currency system... People were misconstruing our acceptance of Bitcoins as an endorsement of Bitcoin."
In retrospect this turn of events should have seemed inevitable: a virtual currency created by hackers (in the general sense) will inevitably attract hackers (in the negative sense) in search of exploits, if only for the challenge. For that matter, Linden Dollars regularly gets hit with hacking attempts too, but since it's backed by a profitable corporation, it comes with paid white hats who can keep the stagecoach from being overrun (so to speak.) Government-backed currency has an even more effective security fallback that helps keep the money stable: Large unfriendly dudes with guns.
So what currency can OpenSim grid turn to? Two likely options, in my view, one obvious, another perhaps less so:
Frankly, since OpenSim's fate is so deeply linked with the health of Second Life, I'd work on integrating Linden Dollars through the network. (Which was Cory Ondrejka's long term strategy when he was CTO of Linden Lab and pushed forward the open sourcing of the viewer.) And definitely consider ways to integrate Facebook Credits as a payment method, because that currency is on track to have 25 million users in the next 12 months, and 100 million by 2016.
There's also PayPal and PayPal Micropayments.
And the OMC from Virwox, currently in use on 28 OpenSim grids -- https://www.virwox.com/omc-open-metaverse-currency.php
But you've got a good point about white hats. Virwox has some security mechanisms (they use SSL encryption and Web-based confirmation of all transactions) but they don't have the numbers of paid security staff that PayPal does (or Second Life does, or Facebook does) -- at least, not yet.
Posted by: Maria Korolov | Tuesday, June 21, 2011 at 12:36 PM
I'd like to make a few corrections for the sake of perspective:
1. New malware steals your BitCoins - This refers to malware on the local machine which steal unsecured bitcoin wallets, akin to pickpockets. The onus of responsibility (and fault) lay with the individual users for not securing their own wallets as they are told to do when running BitCoin. There is a step by step guide on why and how one should do this up front, though it seems those who the malware affected did not heed this security step.
2. Mt. Gox was hacked, and the share price for BitCoin *on their own index* dropped to pennies as a result, but across the board through the numerous other exchanges, the price remained stable around $17 per BitCoin. This is a testament to the stability of the BitCoin system overall and shows only that the weakest links are the centralized gateways and/or the users themselves who are not practicing proper security with their own digital money.
3. EFF dropping the BitCoin donation is merely an indicator that they are prone to media hype and public PR opinions.
If anything has been learned from these things, it should have been that the weakest links and security issues are not the technology but what happens when you put central gateways without the proper security measures in place on a system designed to be entirely decentralized. It is also a testament to the unending ignorance of the user population for ignoring sound advice by not securing their own BitCoin wallets.
Should a virtual environment use BitCoin? I say absolutely, assuming the virtual environment and exchange is actually secure, and provides a method to automatically, and transparently, encrypt and store the user's BitCoin wallets, thus removing the two weakest links in the chain that lay outside of the BitCoin system technology.
Since that doesn't seem to be the case, I presume the recommendation against using BitCoin is an admission of instability and lack of security in that you do not trust the stability or security in OpenSim enough to support using BitCoin in a secure fashion.
That is actually a fine admission, and an honest one. However, relying on skewed headlines and not revealing the context of those headlines to make your case for why BitCoin shouldn't be trusted is poor journalism at best.
Posted by: Aeonix Aeon | Tuesday, June 21, 2011 at 03:32 PM
As an aside, if anyone is actually interested in what the overall health of the BitCoin market is, in near real time, they need only look here:
http://bitcoincharts.com/markets/virwoxSLL.html
Particularly at the fact that VirWox is trading on the charts. As anyone can see, the claim of "Dropping to Pennies" is an ill-effective scare tactic of sensationalist journalism when compared to the actual hard facts of the market charts themselves.
Posted by: Aeonix Aeon | Tuesday, June 21, 2011 at 03:50 PM
I'm fascinated by how the recent announcement from the EFF -- which is backed by some of the best and most pro-civil libertarian minds in online digital rights, both in technology and law, and which has taken numerous stands that are extremely unpopular with powerful business, media, and political interests -- is dismissed as succumbing to "hype and public PR opinions". If the EFF doesn't "fully understand the complex legal issues involved" with Bitcoin, then surely no one else does. And likely never will.
Posted by: Hamlet Au | Tuesday, June 21, 2011 at 03:58 PM
Hamlet! have you not yet learned to ignore the drama?
Posted by: qarl | Tuesday, June 21, 2011 at 06:52 PM
Yea. Some of us were correct. You can't just make up an international currency. The reasons are so many and really obvious that only a total idiot would buy into such a doomed venture. They should count themselves lucky if they are still breathing after tweaking the noses of every government on Earth.
Posted by: Ann Otoole InSL | Tuesday, June 21, 2011 at 07:17 PM
The problem isn't one of artificial currencies, but one of decentralised currencies.
Posted by: Tateru Nino | Tuesday, June 21, 2011 at 08:11 PM