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Germany

Euro Beware: The Real Threat May Be Bitcoin, The Online "Crypto-Currency"

Virtual money, real value
Virtual money, real value
Daniel Eckert

BERLIN - With all its other problems, the euro is also getting unexpected -- and “underground” -- competition from a new virtual currency.

It's called the bitcoin, and in case you haven't heard, it is the most ambitious (and to-date, successful) attempt to create a new online currency, generated by the calculations of thousands of computers. Some say it amounts to a kind of anarchic money.

This week, as the euro crisis has reached Cyprus, the bitcoin (BTC) marked a record high on the largest online exchange, bitcoin.de. The exchange rate has approached 50 euros, more than doubling the value of the virtual currency within four weeks.

The latest run on bitcoins was caused by reports of a bitcoin fund being launched by Malta-based hedge fund called Exante. The Bitcoin Fund has an initial minimum subscription of $100,000 and a 0.5% upfront subscription fee. Current assets under management in the Bitcoin Fund are $3.2 million.

"Investor demand is rising quickly," says Oliver Flaskämper, who drives bitcoin.de: "Many investors realize that the present market cap of around $520 million leaves a lot of room."

Europeans alone have more than 5 trillion euros in their wallet files and accounts. Everyone can use bitcoins as long as they have a wallet app installed on a PC or a smartphone.

What makes bitcoins particularly attractive is that users can use them for payment at an increasing number of places. Over 2,000 companies and organizations now accept the alternative currency, including pizza delivery outfits, but also gambling sites of dubious repute.

It has also been said that bitcoins are used in drug transactions. Unlike credit cards or online payment services like Paypal, bitcoin transactions are essentially anonymous which has aroused the suspicions of bankers and politicians alike. Bitcoin fans argue that cash was and remains the primary means of paying for drugs – and that nobody has aired the idea that cash should be abolished.

The history of the bitcoin has so far been marked by ups and downs. The virtual currency was introduced in 2009 by Japanese programmer Satoshi Nakamoto, who wanted to create counterfeit-proof money for the web. It now appears however that the name is a pseudonym, and that nobody really knows who is behind the bitcoin idea.

Bubbles and fluctuations, but still there

Hype developed around the crypto-currency relatively quickly. In 2011 the first speculation bubble – that had driven the exchange rate to $30 – burst. Then came a hacker attack on the major bitcoin exchanges. Users lost virtual coins worth several hundred thousand euros and confidence – and prices – collapsed.

Despite fluctuations, bitcoins remain an extremely interesting concept. They are created by highly complex calculations running on thousands of computers. Approximately every 10 minutes, 25 new bitcoins are created. The algorithm takes into account that at some point a maximum number of virtual coins will be reached – ostensibly around 2140, and from 2033 on no large quantities of new bitcoins will be made.

In that sense the bitcoin system bears resemblance to the gold standard. Unlike euros or dollars the amount of bitcoins cannot be increased at will. The virtual coins are interesting for investors betting on the inflation of paper money.

Bitcoins might even presage a whole new era. "Money is being re-invented," Thorsten Polleit, chief economist at Degussa Bank, believes. He sees a future where different kinds of money will be competing with each other. "The banks are misusing the money monopoly they have, using money for political purposes. In the long run that will lead to devaluation" – and the demand for private mediums of exchange will increase, he says.

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Society

Pillar Of Shame, Symbol Of Freedom: Tiananmen To Hong Kong To Berlin

The “Pillar of Shame” in Hong Kong, a memorial to the victims of the Tiananmen Square massacre, was a symbol of freedom and democracy. Beijing has taken it down, but a replica is being built in Berlin. Activist Samuel Chu explains why that means so much to him.

Image of the famous statue Pillar Of Shame marking the Tiananmen Square massacre.

The famous statue Pillar Of Shame marking the Tiananmen Square massacre was removed in 2021 at the University of Hong Kong, China.

Liau Chung-ren/ZUMA
Samuel Chu

-Essay-

HONG KONG — On Dec. 22, 2021, shortly before midnight, masked workers removed the original “Pillar of Shame” statue from the campus of the University of Hong Kong, where it had stood for more than 24 years. The sculpture was dismantled into three pieces and wrapped in white sheets that were reminiscent of the shrouds used to wrap dead bodies.

The pillar has a very personal meaning for me. Its arrival in Hong Kong in 1997 marked the start of a friendship between the artist Jens Galschiøt and my father, the minister Chu Yiu-ming, a founding member of the Hong Kong Alliance.

The Alliance was founded to support the protest movement in Tiananmen Square in Beijing (Tiananmen meaning the Gate of Heavenly Peace). After the protests were brutally suppressed, the Alliance became the most important voice working to ensure that the victims were not forgotten, and for 30 years it organized annual candlelight vigils on June 4 in Hong Kong.

When the pillar was removed from Hong Kong in 2021, I traveled to Jens’s workshop in Odense, Denmark to start work on our new plan. We wanted to ensure that the pillar, as a memorial to the murdered of Tiananmen Square, as well as to those who kept these forbidden memories alive in Hong Kong, did not disappear. To understand how it came to this, you need to understand the history and the idea behind the pillar in Hong Kong.

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